Internal Controls
What Are They
And
Why Should I Care?
1
Three Concepts that Supervisors
should understand:
1. The supervisor is responsible for the internal
controls in their area.
2. The supervisor’s attitude significantly
impacts their employees attitude.
3. The supervisor designs the internal control
system.
2
Who is Responsible for Internal
Controls?
3
4
How does Attitude Affect
Internal Controls?
5
It is important to understand
that your attitude will set the
standard that will impact the
actions of your employees.
6
Foundation for Good Internal Controls
Control Environment
7
View the Video
8
Changing the time sheets in
this manner is fraudulent
behavior and sends a
message to the other
employees that rules can be
ignored.
9
Control Environment or Ethical
Climate is Established by:
Examples set by
leaders
Core values of the
institution
Rewarding those
who appropriately
raise issues
10
Ensures that:
Information and communication flows freely
between employees and the supervisor.
Management is responsive.
Responsibilities are well defined and
reasonable.
Employees are given the necessary tools to do
their job.
11
View the Video
12
It is important that our
communications with our
employees are clear and
consistent. Be careful that the
messages you send verbally are
consistent with written
departmental policies.
13
Who Creates, Implements and
Manages Internal Control?
14
Questions to ask in reviewing/designing the
system of internal controls:
What assets need to be protected?
What are the risks to these assets?
What procedures could be implemented to reduce
the risks to those assets?
15
Identify Assets that Need to be
Protected
Risk Assessment
Control Environment
16
Protecting assets.
Ensuring Accuracy of records.
Promoting operational efficiency.
Encouraging adherence to policies, rules,
regulations, and laws.
Reducing the opportunity for fraudulent
activity.
17
Personal Controls:
University Controls:
Lock homes & vehicles
Keep PIN numbers
secure
Keep checkbooks and
cash secure
Review bills before
paying
Lock offices & cabinets
Keep passwords
confidential
Current and check stock
are kept in secure locations
Monthly p-reports are
reconciled to ensure
accuracy of department
records
18
Actions Taken to Control Risk
Control
Activities
Risk Assessment
Control Environment
19
1. Ensuring Employees have appropriate:
System Access
Physical Access (Keys)
Safe Combinations
2. All Access is Terminated
when Employees Leave
3. Duties are Segregated
4. A System for Authorizing
Activities is Developed
20
Reconciliations
Logs
Checklists
Backup procedures
Contracts
21
One person’s responsibilities are
restricted so that they can’t both
cause and conceal errors. For
example one person doesn't record
the transaction, make the deposit,
and reconcile the bank statement.
22
View the Video
23
It is important to evaluate
processes to ensure that
there is adequate review
and/or segregation of
duties.
24
Ensures Control System is Functioning Appropriately
Monitoring
Control
Activities
Risk Assessment
Control Environment
25
Status and Exception
Reports
Process Reviews
– Internal
– External
Feedback processes
– Hotlines
– Surveys
– Employees/Customers
26
Good Internal Controls
ensure you will never be in
the following situation:
27
View the Video
28
Good internal controls would have
provided a log of art work with
pictures of each piece. This would
ensure that any art could be easily
found. In this case a simple log
could have ensured a million dollar
donation.
29
Internal Audit is located in Old Main, Room 415
For additional information, please contact the
Internal Audit Department
Kathleen Miller, CIA, Internal Auditor
kmille43@uwyo.edu
Phone: 766-2385
Jonnie Jenkins, CPA, Senior Auditor
jjenki13@uwyo.edu
Phone: 766-4835
30
31