What are internal controls?
Internal controls are the way in which we ensure business is conducted in the manner we intend. They reflect our values of what s the right and wrong way of doing things. The basic internal control is dependent on those who implement them. Next, how we design our transaction process to happen in certain ways, and how we make sure that they do, represent our internal control environment. Internal controls can be informal, such as by consensus. They can be explicit, also, in the form of codes, rules, regulations of conduct and process. When internal controls are not appropriate in their design or function or if they re inadequate, and give undesired outcomes, then they should be revised. AMAS examines controls in that light and makes recommendations necessary to improve them.
Internal controls can be categorized as either accounting controls or administrative controls. · Accounting controls are designed to safeguard FAMU assets and ensure the accuracy of financial records. · Administrative controls are designed to promote operational efficiency, effectiveness, and adherence to FAMU policies and procedures. · The Division reviews the adequacy of both accounting and administrative controls during audit engagements.
Internal controls are an organization’s methods and procedures that safeguard the organization’s assets, promote operational efficiency, check the accuracy and reliability of accounting data, and encourage adherence to prescribed policies and procedures. Effective internal control systems are designed to ensure 1) that resources are used in accordance with laws, regulations, and policies and 2) that resources are safeguarded against waste, loss, and misuse.
Internal controls are nothing more than policies or procedures put in place to safeguard an asset, provide reliable financial information, promote efficient and effective operations and ensure policy compliance. Generally there are three types of control: • Preventive Controls – are designed to discourage errors or irregularities from occurring. For example: Processing a purchase order only after it has been properly approved by the appropriate personnel. • Detective Controls – are designed to find errors or irregularities after they have occurred. For example: Comparing transactions on monthly management reports to the departmental source documents. • Directive Controls – are designed to encourage a desirable event. For example: written policies and training seminars assist in the accomplishment of goals and objectives.
