Simply defined, internal controls are those procedures you perform everyday to get your job done.  For example, completing a form, having it signed and approved, and making a copy for your records, is a procedure and a control all at the same time.

A system of controls (or procedures) reduces business risk, which is the probability that certain exposures will lead to loss or adverse business conditions.  Good control systems include:

  • Individual accountability
  • Independent monitoring
  • Approval and authorization
  • Separation of duties
  • Comprehensive policies and guidelines
  • Joint custody of assets

A review or audit of your department will determine whether your internal control system can provide reasonable assurance that:

  • Management data is reliable,
  • Assets are accounted for and properly safeguarded,
  • Operating practices are sound and ensure compliance with policies, laws, and regulations, and
  • Resources are used efficiently.