In recent years, many groups and organizations have published standards and guidelines on internal control with varying definitions. Each definition has captured the basic concept of internal control and the definitions are similar in recognizing internal control’s extensive scope, its relationship to achieving the organization’s mission, and its dependence on people in the organization.

The following definition of internal control will guide this discussion:

Internal control or an internal control system is the integration of activities, plans, attitudes, policies, and efforts of the people of an organization working together to provide reasonable assurance that the organization will achieve its objectives and mission.

This definition establishes that internal control:

• impacts every aspect of an organization: all of its people, processes, and physical structures
• is a basic element that permeates an organization
• incorporates the qualities of good management
• is dependent upon people and will succeed or fail depending on the attention people give to it
• is effective when all of the people and the surrounding environment work together
• provides a level of comfort to an organization, however, controls do not guarantee success
• helps an organization achieve its objectives and mission.

Internal controls are an integral part of any organization’s financial and business policies and procedures. Internal controls consist of all the measures taken by an organization to:

• protect its resources against waste, fraud, and inefficiency
• ensure accuracy and reliability of accounting and operating data
• ensure compliance with the organizational policies
• evaluate the level of performance in all organizational units.

Examples of internal controls within the University environment include:

• procedures to properly receive, record, and deposit revenue
• security measures to prevent unauthorized access to files, records, or buildings
• accounting systems and data processing procedures to accurately record information
• review and approval of purchase orders and time sheets.

Internal controls provide reasonable assurance regarding the achievement of efficient and effective operations, reliable financial reporting, and compliance with applicable policies, procedures, laws, and regulations. Internal controls minimize the potential loss, misuse, or unauthorized use of the University’s assets and resources.