How Do Checks & Balances Work Today?

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Checks and balances have been used for many years to keep government and organizations in check.
Checks and balances have been used for many years to keep government and organizations in check. (Image: business image by peter Hires Images from Fotolia.com)

Checks and balances have been a very important part of society since the conception of organized society. Checks and balances help keep people and organizations honest, and keep them in line with the direction the interested parties have deemed the correct path. Some of the earliest forms of government have implemented some form for a check and balance system.

Importance

A check and balance system is very important to the smooth operation of a functional organization. Checks and balances help a group of interested individuals hand the reins of power over to another group of individuals and allows them to keep tabs on the operational activities and choices made. Check and balance also prevent fraud and misconduct by forcing transactions and decisions to flow through several groups of people.

Types

Checks and balances can come in the form of authorization signatures in a company or a voting system in a government organization. Regardless of the vehicle used for checks and balances, the same principles are behind the check and balance system. Business and shareholder organization systems typically use a paper trail to keep tabs on operational managers. Financial organizations have an accounting system that cross checks figures to ensure that they are correct. As financial scandals and fraud continues to increase there will be more of these enacted.

Government

Governments use a large, vast and sometimes painfully slow check and balance system to help control the countries leaders and ensure that their decisions and actions align with the countries people. The larger a government grows, the more important these systems are. Most government check and balance systems function by requiring multiple elected officials to sign off on decisions. These officials usually belong to political factions or parties that vote based on a common ideal or value system.

Finance

Financial sectors and departments are a common location to find an intricate system of checks and balances. Financial checks and balances often revolve around a series of audits and numerical matching checks. In most financial organizations there are several groups accounting officials that must sign off on figures and records.

Business

Businesses use checks and balances to keep the organization operating in the manor the that shareholders deem best. Business checks and balances are most commonly enacted through the election of board members that vote on operational decisions. Board members are elected by shareholders and must disclose operational activities in reports to the shareholders. Whistleblowers are another common factor that keeps a business official in alignment with the company's goals.

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