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Profit and Loss Internal Controls

Among the core goals of every organization is to make a profit. Making profit enables an organization to remain in business and be able to transact its operations. Where there are losses, there is a risk of falling out of business and losing its relevance. This is because it runs out of resources necessary to fund its current obligations as and when they fall due. When an organization is at such a risk of making losses, the financial manager should ensure that they reevaluate how finances are spent and ways of addressing such problems. For an organization to gain profit, there should be cost minimization of available resources.

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The way an organization spends its finances determines the returns it gains. The sporting organization should investigate the exact aspects that have decreased the profitability of the organization. Good utility leads to increases productivity. Upon allocation of resources, there should be people who take responsibility and can account for it (Jones, 2017). It will reduce misuse of any funds allocated to specific projects. It will also increase the returns from the projects. Transparency will be enhanced making it easier for the organization to point out issues that need to be solved.

There should also be priorities when it comes to funding. Cost analysis should be considered to ensure that investment matches the returns (Alexy et al., 2018). With this, unnecessary costs are minimized, and finances are redirected to more profitable ventures. A policy that guides such allocation should be enacted. This will help in preventing any decisions in the future that would risk the profitability of the company.

It is, therefore, clear that profit-making needs the organization to have a reliable financial structure that guides every use of finances. This allows it to minimize costs because only necessary expenses are incurred. Transparency is enhanced, and accountability is attained. Profitability is then made possible.


Alexy, O., West, J., Klapper, H., & Reitzig, M. (2018). Surrendering control to gain advantage: Reconciling openness and the resource‐based view of the firm. Strategic Management Journal, 39(6), 1704-1727. Web.

Jones, G. (2017). Profits and sustainability: A history of green entrepreneurship. Oxford University Press.

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