Evaluating and Improving Internal Control in Organizations

Greetings All,

Our goals for Assurance: q  Plan and perform effective Assurance engagements for Sipradi Companies’ : q  To identify risks which may lead to fail in achievement of performance and profitability targets q  To provide assurance on effectiveness of overall internal control system in managing those risks q  To aid in preventing loss of Assets and strengthen safeguarding

Key Principles of Evaluating and Improving Internal Control

A. Supporting the Organization’s Objectives

Internal control should be used to support the organization in achieving its objectives by managing its risks, while complying with rules, regulations, and organizational policies. The organization should therefore make internal control part of risk management and integrate both in its overall governance system.

B. Determining Roles and Responsibilities

The organization should determine the various roles and responsibilities with respect to internal control, including the governing body, management at all levels, employees, and internal and external assurance providers, as well as coordinate the collaboration among participants.

C. Fostering a Motivational Culture

The governing body and management should foster an organizational culture that motivates members of the organization to act in line with risk management strategy and policies on internal control set by the governing body to achieve the organization’s objectives. The tone and action at the top are critical in this respect.

D. Linking to Individual Performance

The governing body and management should link achievement of the organization’s internal control objectives to individual performance objectives. Each person within the organization should be held accountable for the achievement of assigned internal control objectives.

E. Ensuring Sufficient Competency

The governing body, management, and other participants in the organization’s governance system should be sufficiently competent to fulfill the internal control responsibilities associated with their roles.

F. Responding to Risk

Controls should always be designed, implemented, and applied as a response to specific risks and their causes and consequences.

G. Communicating Regularly

Management should ensure that regular communication regarding the internal control system, as well as the outcomes, takes place at all levels within the organization to make sure that the internal control principles are fully understood and correctly applied by all.

H. Monitoring and Evaluating

Both individual controls as well as the internal control system as a whole should be regularly monitored and evaluated. Identification of unacceptably high levels of risk, control failures, or events that are outside the limits for risk taking could be a sign that an individual control or the internal control system is ineffective and needs to be improved.

I. Providing for Transparency and Accountability

The governing body, together with management, should periodically report to stakeholders the organization’s risk profile as well as the structure and factual performance of the organization’s internal control system. Let’s observe whether above principles are applied within the organization and guide management on implementing it. Regards, CBS