Internal Control

… a core concept used in Implementation and Delivery and Atlas107

Concept description

Treasury Board of Canada (reference below) defines internal control as:

“a set of means that organizations put in place to mitigate risks and provide reasonable assurance in the following broad categories:

  • The effectiveness and efficiency of programs, operations and resource management, including safeguarding of assets;
  • The reliability of financial reporting; and
  • Compliance with legislation, regulations, policies and delegated authorities.”

It notes that:

“In practice, the set of means that represent internal controls can include those elements of an organization such as its resources, systems, processes, culture, structure and tasks that, taken together, support people in managing risks in order to achieve an organization’s objectives.”

Internal control over financial management

Treasury Board of Canada defines internal control over financial management as:

“a set of means to ensure that public resources are used prudently and in an effective, efficient and economical manner. Financial management activities include those of planning, budgeting, accounting, reporting, control, oversight, analysis, decision support/advice, and financial systems. Internal controls relating to financial management also address control objectives and performance expectations as set out in the Financial Management Policy Framework and related policies, directives, and standards.

“Financial management internal controls are a sub-set of the broader departmental system of internal controls dealing with effectiveness and efficiency of programs, operations and resource management, including safeguarding of assets.”

Internal control over financial reporting

Treasury Board of Canada defines internal control over financial reporting as:

“a set of means that allow management and users of financial statements to have reasonable assurance that:

  • records which fairly reflect all financial transactions are maintained;
  • recording of financial transactions permits the preparation of internal and external financial information, reports, and statements in accordance with policies, directives and standards;
  • revenues received and expenditures made are in accordance with delegated authorities and unauthorized transactions that could have a material effect on financial information and financial statements are prevented or detected in a timely manner. This includes providing reasonable assurance that financial resources are safeguarded against material loss due to waste, abuse, mismanagement, errors, fraud, omissions and other irregularities.

“Financial reporting internal controls are a sub-set of the controls for financial management.”

Atlas topic, subject, and course

Controlling Fraud, Waste, and Abuse (core topic) in Implementation and Delivery and Atlas107.

Sources

Treasury Board of Canada, Policy on Internal Control, Definitions, at https://www.tbs-sct.gc.ca/pol/doc-eng.aspx?id=15258, accessed 17 October 2017.

Page created by: Ian Clark, last modified 17 October 2017.

Image: internal Control System Services Bethesda, slide 3, at https://www.slideshare.net/Colekiero/internal-control-system-services-bethesda-md, accessed 17 October 2017.