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INTERNAL CONTROLS
Internal control assessments generally consist of the following procedures:
- Evaluation of the control environment: Tone at the top, existence of an audit committee, etc.
- A control risk assessment: How risks are determined, prioritized and managed.etc.
- Control activities: Organizational policies, procedures, flowcharts, etc.
- Information and and communication: Basis for decisions, roles and responsibilities, etc.
- Monitoring: Techniques used to ensure controls are operating as intended, etc.
Some common misconceptions about internal controls:
- Internal controls will stop all fraud: Internal Controls cannot stop stupid behavior!
- All control issues belong in the finance department: There are many other important areas of operations.
- Job desrciptions need not mention internal controls: The job description is one of the most important tools available to management.
- Performance evaluations should not mention internal controls. This is the most important control management has available.
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