Eric Sheldon CPA, PC

Internal Control Advantages and Disadvantages for Business Owners


  • A limited number of employees have access to the control elements within the workflow. For example, in payroll, the person who write the checks are not the same person who signs the checks. When fewer people are involved, it’s easier to monitor actions and guard against irregularities. 
  • Making transactions transparent helps to increase efficiency. 
  • Well-balanced controls protect employees from accusations of irregularities or misappropriations of funds.


  • You cannot guarantee employees will not try to override controls. 
  • Poorly planned or implemented controls creates frustration among employees, who may in turn, bypass the system.
  • Rigid controls may restrict the company’s flexibility to make operational shifts as needed to stay effective.

Control Weaknesses You May Have

Reciprocity outlined four major internal control weaknesses that put your data at risk, including:

  1. Technical control weaknesses focuses on software and hardware.
  2. Operational control weaknesses result people not following policies and standards.
  3. Administrative control weakness are policies and procedures put in place to protect the company’s sensitive information.
  4. Architectural control weaknesses highlights and addresses risks in your company’s IT environment.

If you need help establishing internal controls at your company, give me a call. I’d be happy to help you outline the process, identify tools, and recommend software solutions.

You Might Also Like

Did you like this article?

Get notified when I publish new articles. Just enter your email address below.

About the Author

Eric Sheldon

Eric Sheldon

Eric Sheldon is a certified public accountant with more than 25 years of experience in a wide variety of industries. He's the owner/operator of Eric Sheldon CPA, PC, an accounting firm that specializes in providing tax strategy and preparation, accounting, and bookkeeping services to individuals and small business owners.

More information:

How is Crypto Reported to the IRS?

Under the broker information reporting rules, brokers must report transactions in securities to both the IRS and the investor on Form 1099-B. It encompasses cryptocurrency exchanges, custodians, or platforms (e.g., Coinbase, Gemini, or Binance), and digital assets, such as cryptocurrency (e.g., Bitcoin, Ether, or Dogecoin).   Legislation is also extended to existing cash reporting rules

Read More »

How to Account For Crypto Payments In Your Accounting Software?

With the increased attention cryptocurrencies and other digital assets are getting from consumers, companies and governments, you might be wondering how you account for payments in your accounting software?   Currently, the standards used to account for cash or cash equivalents are not applied to crypto, yet. That’s because virtual currencies are not considered legal

Read More »

How to Get a Crypto Loan?

Before jumping right to crypto loan requirements, let’s first take a look at what crypto lending is.   According to Stilt, “Crypto lending refers to a type of Decentralized Finance that allows investors to lend their cryptocurrencies to different borrowers. This way, they will get interest payments in exchange, also called “crypto dividends”.   A

Read More »