Internal Control is a process, effected by an entity’s board of directors, management, and other personnel, designed to provide reasonable assurance regarding the achievement of objectives relating to operations, reporting, and compliance.
Key Concepts of Internal Control
Internal control is a process. It is a means to an end, not an end in itself. The goal is reliable financial reporting, effective and efficient operations, and compliance with laws and regulations.
Internal control is affected by people. It is not merely policy manuals and forms, but people's actions at every level of the organization.
Types, Objectives & Components
Consequences of Internal Control Failures
- Errors or fraudulent activity
- Inaccurate financial statements
- Misappropriated assets
- Audit findings and cost disallowance
- Loss of grants and contracts
- Criminal/civil/administrative penalties
- Negative publicity and damage to reputation
- Loss of students and faculty members
- ABOR Policy 6-711: Internal Control Responsibilities
- Guidelines for Implementation of ABOR Policy 6-711
- State of Arizona: Office of the Auditor General
- COSO (Committee of Sponsoring Organizations of the Treadway Commission)
1 Committee of Sponsoring Organizations of the Treadway Commission (COSO), Internal Control – Integrated Framework (Executive Summary, May 2013), pg. 3.