Internal control is a set of policies, procedures, and systems put in place by an organization to ensure that operations are conducted properly and according to specified standards. Its main objectives are to ensure accurate financial reporting, safeguard assets, enhance operational efficiency, and comply with relevant laws and regulations.

For instance, internal controls include maintaining a separation of duties in financial transactions to reduce the risk of errors or fraud, ensuring regular reconciliation of accounts, or implementing access controls in financial systems to restrict unauthorized use. Another example is a monthly reconciliation of the balance sheet; this is to confirm that financial statements are accurate. In the context of month-end close checklists, internal controls play a vital role in outlining key steps necessary for verifying and validating an accurate financial close.

When properly implemented, effective internal controls contribute significantly to the credibility of financial statements and enhance the reliability of decision-making processes within the organization.