Internal Controls
Simply defined, internal controls are those procedures you perform everyday to get your job done. For example, completing a form, having it signed and approved, and making a copy for your records, is both a procedure and a control.
A system of controls (or procedures) reduces business risk, which is the probability that certain exposures will lead to loss or adverse business conditions. Good control systems include:
- Individual accountability,
- Independent monitoring,
- Approval and authorization,
- Separation of duties,
- Comprehensive policies and guidelines, and
- Joint custody of assets.
A review or audit of your department will determine whether your internal control system can provide reasonable assurance that:
- Management data is reliable,
- Assets are accounted for and properly safeguarded,
- Operating practices are sound and ensure compliance with policies, laws, and regulations, and
- Resources are used efficiently.