We have seen the good, the bad and the ugly when it comes to internal controls, whether for a publicly traded or privately held company. Yes, even non-for-profit organizations and small business need to have effective internal controls. Too often, internal controls are treated as a necessary but burdensome cost – primarily a tool for compliance. But leading organizations are taking a more strategic and effective approach: treating internal controls as a value lever. This approach can not only save significantly on audit fees and internal audit costs, but also reduce the impact on the finance and accounting teams while driving improved outcomes for the organization.

Internal Control Optimization is the disciplined process of tuning people, process and technology to achieve three key outcomes: 

  • Lower Cost – by eliminating redundancies and re-work, right-sizing scoping, and automating low-value tasks.
  • Lower Risk – by aligning control design directly with the organization’s true risk profile.
  • Higher Value – by embedding controls into the business and creating an “audit-ready” culture.

Optimization is more than checklists, it is a mind shift grounded in clarity, accountability, collaboration and intelligent design. 

What Causes Controls to Break Down?

Symptoms of a sub-optimal control environment include:

  • Unclear ownership at the process level
  • Misalignment between controls and risk, leading to inefficient risk mitigation. We see this with excess numbers of controls created from checklists rather than designed for the business to address the risks.
  • Reactive documentation efforts responding to audit deficiencies, most often cause by lack of alignment on documentation standards.
  • Inefficient audit cycles created by:
    • Difficulty obtaining documentation required for audit
    • Re-work to remediate and then re-test deficiencies.
  • Low engagement from business teams – how often do we hear “that is what the auditors said we need”.
  • Low value: internal control does not contribute to better outcomes.

What Does an Optimized Internal Control Program Look Like?

Internal control is simple in concept- if process owners are engaged, understand their responsibilities, and execute consistently, there is no reason for deficiencies and other issues. In a well-designed and operating program, all the pieces fit and work together:

A Practical Roadmap to Optimize

To get it right, organizations need a holistic and practical roadmap:

  • Tone at the Top: Controls succeed when leaders make them a priority and communicate this clearly and consistently.
  • Clear Ownership. Engagement and Training: Assign responsibility at both the process and control level and then engage those involved, providing training so everyone knows what they must do, how and when.
  • Right-Sized Scoping: Balance materiality and risk to define what’s truly in scope.
  • Smart Control Design: Focus on controls that address the critical risks effectively and efficiently, precise, and automation-ready.
  • Audit-Ready Documentation: Align evidence with auditor expectations from the start.
  • Technology Leverage: Use GRC tools and automation tools to reduce testing effort and increase reliability.

Identifying the Risks & Designing the Right Controls

The objectives of Risk and Control Design are to understand the source of potential material errors in the financial statements, and then design the right controls.

Understanding what could cause a material error in the financial statements – how and where – is key to getting the program sized properly and designing the right controls. 

Wherever possible, we want to rely on automated controls and leverage powerful controls and review and monitoring controls.

Risk & Control Workshop

At Axia, we have found that holding risk & control workshops as a collaborative exercise with process owners is very effective in ensuring that risks are well understood, the controls are designed and operated to mitigate these risks, and the controls are embedded into “how things are done”

In a control and risk workshop, the teams review the processes they own, understand what can go wrong, assess these risks and then design the most effective and efficient way to mitigate the risks. We typically facilitate these sessions and can bring our insights and experience to help the teams. 

Automate Where It Makes Sense

Automation is one of the most effective ways to streamline internal control programs. GRC platforms and automation tools can eliminate manual testing tasks, perform reconciliations, extract evidence, and even execute low-judgment controls—freeing control owners and auditors to focus on analysis. The capabilities to automate have increased greatly with recent developments in generative AI and agentic AI. Examples of these tools include MindBridge Ai Auditor, DataSnipper and AuditBoard AI. In addition tools such as Robotics Process Automation (RPA) can be used to automate repeatable defined tasks.

Evidence of Controls

It is important to maintain evidence of controls. If the company is publicly traded and subject to SOX part B, the controls will be tested by your independent auditors. Even if the company is not public, maintain evidence is critical for internal audit o can even reduce the audit costs by supporting a control reliance approach. 

It is important to collaborate with your internal and external auditors to understand what they plan to test and what evidence they are looking for, and then design the evidence maintained accordingly to ensure a smooth and efficient audit process.

 

Coordination and Project Management

It is critical to invest time and effort into planning and coordinating internal control activities. Larger organizations typically have people dedicated to this. Best practice is for this responsibility to reside in the controller’s organization, as the controller has accountability for the financial statements. 

Build for the Long Term

Internal control should be simple in concept: if process owners understand their role and execute consistently, there’s no reason for deficiencies. With an optimized structure, organizations gain more than just a clean audit—they gain confidence, clarity, and control.