Question:

Contribution of internal controls on profitability performance?

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To what extent have the controls been put in place effective?

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  1. Tough question to answer, because of the difficulty in measuring the effectiveness of controls.  i.e. What might happen to a firms assets and/or the effectiveness of management if the proper internal controls were NOT put in place?

    Without adequate controls these are some examples of things that can happen:  Potential fraud, pilferage, lower credit/bond ratings, qualified audit reports, ineffective management (redundancy, overlapping lines of responsibility and accountability), possibility even so far as loss of a firms credibility and business to competitors, etc., etc.

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