When
you came to work today, did you lock the doors to your house? If you did, that's your own "internal control" to safeguard the
assets you own.
Do
you review your bank and credit card statements each month?
(You really should, you know.) If you do, then you are ensuring
the accuracy of the transactions entered on the account statement.
When
you go grocery shopping, do you use a list (written or mental) or
do you stroll the aisles looking for what looks good today?
Most of us use a list as it promotes efficient time use and helps
us stay within our budgets.
If
your children are still school age, do you check on their whereabouts,
school progress, friendships and habits? If
you do, then you are ensuring and encouraging adherence to your
policies and goals. At Lincoln University, internal controls serve
the same purpose:
- Protect
the University's assets
- Ensure
records are accurate
- Promote
operational efficiency
- Encourage
adherence to policies and goals
Generally,
controls are of two types:
Preventative
Controls -- are
designed to discourage errors or irregularities from occurring.
Example: Processing vouchers only after signatures have been obtained
from appropriate personnel.
Detective
Controls -- are
designed to find errors or irregularities after they have occurred.
Example: Reviewing departmental conformance reports for unexpected
or unusual charges.
Who
is responsible for internal controls?
Everyone plays a part in Lincoln's internal control system. Ultimately,
it is Lincoln management's responsibility to ensure that controls
are in place. That responsibility is delegated to each area of operation.
Every employee has some responsibility for making this internal
control system function. Therefore, all Lincoln's employees need
to be aware of the concept and purpose of internal controls. As
a supervisor or director, you need internal controls to assure yourself
that your area is performing its functions properly and achieving
its goals. You must ask yourself, how do I know that things are
ok? Do I sit here thinking everything is fine until I feel that
my feet are wet (problems get to my level) or do I inspect the dam
and river on a regular basis to see their condition (check reports
and controls to know what is happening)?
Good internal controls will not prevent or solve all your problems.
They will help prevent surprises and give you an early warning on
problems and procedures that may need to be taken or modified in
order to address the problems before they become disasters.
Where
does internal auditing fit in all this?
Internal
auditing is an independent appraisal function established within
an organization to examine and evaluate the adequacy and effectiveness
of the organization's internal control system and its overall quality
of performance. Internal auditing furnishes management and the Board
of Trustees with analyses, appraisals, recommendations, counsel,
and information concerning the activities reviewed by the auditors.
Internal
auditing reviews the reliability and integrity of information, compliance
with policies and regulations, the safeguarding of assets, the economical
and efficient use of resources, and established operational goals
and objectives. Internal audits encompass both financial activities
and operations.
Also,
see the link Frequently Asked Questions and Answers
for other questions on Internal Control.
