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:

1. Internal controls will stop all fraud:  Internal Controls cannot stop stupid behavior!
2. All control issues belong in the finance department:  There are many other important areas of operations.
3. Job desrciptions need not mention internal controls: The job description is one of the most important tools available to management.
4. Performance evaluations should not mention internal controls.  This is the most important control management has available.