Best Practices in Internal Controls

Learn about documenting your department's key control activities to mitigate financial errors.

Internal controls policy

The Regents of the University of California have adopted the principles of internal controls published by the Committee of Sponsoring Organizations (COSO) of the Treadway Commission.

UC San Diego is committed to upholding the principles of internal controls published through COSO’s Internal Control – Integrated Framework.

In coordination with the University of California, Office of the President, UC San Diego develops campus-wide policies and procedures to ensure a system of internal control is maintained per policies established by the Board of Regents of the University of California and the University of California, Office of the President.

Click the link to view the Internal Controls Policy.

Checklist

A checklist has been developed to assist departments with documenting who performed and certified the control activities.  Some control activities are required by University policy.  Other control activities can be optional as determined by the school or department's leadership.

Objectives and references to instruction are provided in the Checklist for Best Practices in Internal Controls. Some departments may have specific activities not listed below that are acceptable alternatives, if that is the case, please note the reason in the checklist.

Best practice: download new copy at least quarterly and when new updates are posted in the Weekly Digest.

How to get help

• Review answers to common questions in the article: FAQ: Internal Controls Checklist.
• For general questions on the internal controls policy or how to use the checklist, please submit a ticket via Services & Support [About: Financial Accounting, Related to: Internal Controls, More Specifically: Internal Controls Support].
• Use this link to Meet with ICA for virtual support at a convenient time.

Why perform control activities

An internal control is an action your department takes to prevent and detect errors, omissions, or potentially fraudulent transactions in its financial statements. Your department should already have key financial review and follow-up activities in place. Ongoing monitoring activities and other planned actions to address risks result in an effective internal control system. This ensures sound business practices, which minimizes our risk of inaccurate financial information and maintains public trust.

To fulfill documentation requirements, departments should review those activities and identify key controls.

Be able to answer these questions:

• What controls exist?
• Are those controls working?
• Are those control activities documented, properly performed, and reviewed?

Why documenting control activities is critical

• All units are required to document their performance and certification of control activities.
• A checklist has been developed to assist departments with documenting who performed and certified the control activities.  See the control activities section below for more information.
• It provides documented evidence that internal control activities are performed regularly as prescribed by SAS 115.
• To demonstrate that review and follow-up activities were performed.
• Retention of documentation is necessary for audit purposes.
• Documentation should be saved electronically, in a location determined by the department’s leadership, and accessible to authorized personnel.
• If electronic sign-off is used, performers and certifiers should consider using electronic signature tools, like DocuSign, to document timeliness or review.

Responsibilities

• Performer is an individual within the department responsible for creating and storing the underlying documentation of the internal controls review. A performer should not review or certify their work.
• Certifier is an individual (i.e., department head, Department Business Officer, or Management Services Officer) within the department other than the performer. A certifier will verify that the control activities have been performed appropriately and within the prescribed accounting period.
• Department Head establishes and delegates responsibilities to Department Administrators (i.e., the Performer and Certifier roles) within the department. Department heads are ultimately responsible for ensuring control activities have been completed. Contact Internal Controls & Accounting via Services and Support if you have questions about the delegation.
• Department Administrators are responsible for ensuring that internal controls are established, properly documented, and maintained for activities within their jurisdiction and areas of responsibility.
• Vice Chancellor offices should have jurisdiction over their departments and may have additional requirements for department administrators to follow.
• Internal Controls & Accounting provides guidance and best practices for control activities (i.e., policies and procedures).
• Audit and Management Advisory Services will have access to the documentation of control activities completed by departments, upon request.

Resolving internal control deficiencies

Department administrators and managers are responsible for prompt and effective corrective action on internal control findings and for implementing remediation or action plans as internal and external auditors recommend.

Release Notes & Communications