Internal Controls May Contribute to Runaway Processes


    Last Sunday’s Dilbert comic strip shows a very funny situation at the office but is all the more common than funny in real-life!

    Dilbert wants to make a change to an approval system. However he needs to undergo a course in making changes to the approval system before he can do it. However the course enrollment system is down and so he cannot register for the course. He cannot book the time he spends discussing this with his boss, since it is not directly billable to his project!

    Runaway Processes! All because of well meaning bean counters in the company want to put in internal controls!. Just to ensure that things are done according to rules. However, Internal Controls always have a way of slowing actual work done and sometimes overwhelm and obscure the very objective of the organization.

    Happens all the time in the public sector and governmental organizations, but also can happen very easily in private companies too. If proper checks are not in place before hand.

    This is where the Toyota Production System and its Value Added Analysis comes in handy. Internal Controls, no matter what they are are always Non-Value Adding to the end customer. By their very definition, they are INTERNAL controls and as such may not be of much use to the end customer. The TPS provides a way of identifying these kinds of activities and trying to eliminate them or at least shorten the time needed to do them.

    Internal Controls are there to make sure that employees are accountable and there are audit trails of who exactly within the company was responsible for something. It may not be eliminated in all cases. A country may need to do a criminal background check or a police check before they can issue a passport. However, they can issue a passport first while kicking off a background check at the same time. Nine times out of ten, there may not be anything wrong. In case something bad comes up in a background check, they can revoke the passport.

    Petty cash within companies have an upper limit. Any payment above a certain limit cannot be done in just simple cash being handed over but needs to go higher for approval. All of these are there for specific reasons and cannot be done easily away with. However these approvals can be speeded up with workflow, email etc.

    Internal Controls may be necessary, but if you don’t keep a watch on them, they take a life on their own and pretty soon you will have absurd situations where the objective of the business becomes subservient to the internal processes!

    Like the Dilbert strip above!

    Creativity is the sudden cessation of stupidity. – Edwin Land


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