What is Internal Control?
Internal control is broadly defined as a process, effected by an entity's board of directors, management, and other personnel, designed to provide reasonable assurance regarding the achievement of objectives in the following categories:
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The reliability and the integrity of information.
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Compliance with policies, plans, procedures, laws, and regulations.
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The safeguarding of assets.
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The economical and efficient use of resources.
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The accomplishment of established objectives and goals for operations and programs.
Who is responsible for Internal Control?
The administrator who is responsible for the accomplishment of goals and objectives is also responsible for establishment, maintenance, and monitoring of the internal control system which helps ensure the accomplishment of those goals and objectives. He or she is responsible for the sound financial condition of the unit, protection of the university's assets including its human resources, and compliance with federal, state, Board of Regents, and University rules, regulations, and procedures. He or she must ensure that the funds entrusted to the unit are used appropriately. The administrator may delegate some of the related duties but cannot delegate accountability.
Why are good Internal Controls important?
Good internal controls are essential to assuring the accomplishment of goals and objectives. They provide reliable financial reporting for management decisions. They ensure compliance with applicable laws and regulations to avoid the risk of public scandals. Poor or excessive internal controls reduce productivity, increase the complexity of processing transactions, increase the time required to process transactions and add no value to the activities.
Good internal controls help ensure efficient and effective operations that accomplish the goals of the unit and still protect employees and assets.