soft skills
WHAT IS AN INTERNAL CONTROL SYSTEM? According to the Turnbull guidance in the UK Combined Code, control systems need to:
● Safeguard company assets
● Maintain the efficient running of the business
● Protect the accuracy of financial reporting information
● Protect the company from breaking laws and regulations
There are several ways in which control can be achieved in an organisation:
● The use of contracts (e.g. with employees) to clarify roles and responsibilities
● A system of reward and discipline
● Feedback and feedforward
● A clear organisational and command structure
It is generally accepted that a good Internal Control System is made up of 5 elements:
● A strong Control Environment ● Good Control Procedures ● Good Risk Assessment ● Good Information Systems ● Effective Monitoring (typically the role of internal auditors) Control environment The control procedures are unlikely to be effective unless there is a strong control environment:
● Management Attitude needs to be strong: o managers follow same controls as staff, no override o those breaching controls are punished o
● Staff who are likely to follow the controls: controls are part of staff training o recruitment process to get "right" sort of people (e.g. No criminal record) o
● Segregation of Duties training to ensure all understand importance of controls o different parts of processes done by different people o nobody checks their own work o nobody has total control of all parts of a transaction
WHAT IS AN INTERNAL CONTROL SYSTEM? According to the Turnbull guidance in the UK Combined Code, control systems need to:
● Safeguard company assets
● Maintain the efficient running of the business
● Protect the accuracy of financial reporting information
● Protect the company from breaking laws and regulations
There are several ways in which control can be achieved in an organisation:
● The use of contracts (e.g. with employees) to clarify roles and responsibilities
● A system of reward and discipline
● Feedback and feedforward
● A clear organisational and command structure
It is generally accepted that a good Internal Control System is made up of 5 elements:
● A strong Control Environment ● Good Control Procedures ● Good Risk Assessment ● Good Information Systems ● Effective Monitoring (typically the role of internal auditors) Control environment The control procedures are unlikely to be effective unless there is a strong control environment:
● Management Attitude needs to be strong: o managers follow same controls as staff, no override o those breaching controls are punished o
● Staff who are likely to follow the controls: controls are part of staff training o recruitment process to get "right" sort of people (e.g. No criminal record) o
● Segregation of Duties training to ensure all understand importance of controls o different parts of processes done by different people o nobody checks their own work o nobody has total control of all parts of a transaction
Comments
Post a Comment