Internal Controls

Read how to achieve high standards of business and ethical practices.

In an effective control environment, competent people understand their responsibilities and the limits of their authority, and are knowledgeable, mindful, and committed to doing what is right.

The information below will help you achieve high standards of business and ethical practices:

Establishing an ethical environment

Establishing an ethical environment and setting the tone at the top of the organization is the most important element of the accountability and control environment. Each of the components work together to create a comprehensive system capable of deterring fraud, and preventing, detecting, and correcting problems based on an overall assessment of risk and exposure.

The university has adopted an internal control methodology developed by the Committee of Sponsoring Organizations (COSO), in which internal control is defined as a process implemented by management that provides reasonable assurance that:

1. Operations are effective and efficient.
2. Financial and operational reports are reliable.
3. Compliance with applicable laws, regulations, and internal policies and procedures has been achieved.

Components of internal control listed in order of importance and effectiveness

• The control environment sets the tone for the organization. Factors such as integrity, ethical values, competency, management philosophy, and operating style form the foundation for other components of internal control, and for providing discipline and structure.
• Risk assessment represents the identification of circumstances which may impede the organization's ability to achieve its business objectives, and the procedures in place that mitigate the identified risks.
• Control activities are undertaken by the organization to ensure compliance with sound business practices, including the development of policies and procedures, the review and approval of transactions, the segregation of duties, and account reconciliation. Control activities should be documented, including follow-up activities.
• Information and communication comprise the transmittal of quality data to the right people at the appropriate time to ensure employees have adequate information to effectively discharge their responsibilities. Effective communication must also occur in a broader sense throughout the organization.
• Monitoring activities assure that processes are working as intended and actions are taken to address problems with the quality of performance. This includes regular monitoring, management and supervisory activities.

Find out more

• Learn how to implement internal control practices.
• Find out about SAS 115, which establishes guidelines for internal control measures.