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INTERNAL CONTROL

INTERNAL CONTROL. MONITORING AND ASSESSMENT. Session Overview. Till date five components of internal control were discussed during this training program. During this session importance of monitoring will be discussed. Learning objectives.

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INTERNAL CONTROL

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  1. INTERNAL CONTROL MONITORING AND ASSESSMENT

  2. Session Overview • Till date five components of internal control were discussed during this training program. • During this session importance of monitoring will be discussed.

  3. Learning objectives • During this session participants will learn the importance of monitoring. Management is required to conduct effective monitoring that assesses quality and performance over time and includes supervisory monitoring activities such as (1) program management review of result (2) program management correction of previously identified deficiencies, and internal audit and IG activities.

  4. Concept of monitoring • Internal control deteriorates over time if not properly maintained. • It is necessary to check the functioning internal control through quality assurance unit and • Focus review of specific operational areas through management audit or performance audit.

  5. Continued… • Management involvement in internal control is crucial for effectiveness. • It set the tone of the top and determines whether control environment is conducive to the effective functioning of the internal control. • Some aspects are vital in seeing effective monitoring.

  6. Vital aspects of effective monitoring • Review the internal control to judge the required changes. • Monitor performance against targets and indicators. • To see the assumptions behind the objective. • Information relevant for decision making.

  7. Continued.. • Information system of the organization is up to date • Take lessons from results of monitoring and make continuous improvement in internal control. • Assess the control periodically. • Establish procedure for authorization and payment.

  8. Monitoring the quality of system • Monitoring quality of internal control is accomplish routine activities, separate evaluations or combination of both. • Ongoing monitoring of internal control is built in to the activity of entity. • Ongoing monitoring activities cover each of the internal control components and involve action against irregular, unethical, uneconomical, inefficient and ineffective control system.

  9. Separate evaluation • The scope of separate evaluation will depend on assessment of risks and effective ness of ongoing monitoring procedures. • Specific separate evaluation cover the evaluation of effectiveness of internal contro system.It ensures that internal contro achieves the desired results based on predefined methods and procedures.

  10. Objective of monitoring. • To ensure that audit findings and recommendations are promptly resolved. • Monitoring is aimed at ensuring that controls are operating as intended and are modified for changes in conditions. • Monitoring should assess the achievement of general objectives and entity’s mission.

  11. How to monitor • Monitoring the internal control activities themselves should be clearly distinguished from reviewing an organization’s operation. • Ongoing monitoring occurs in course of normal operations • It is performed continuously. • It is ingrained in entity’s operations.

  12. Separate evaluations.. • Separate evaluations takes place after event/fact • Separate evaluations of control can also be useful by focusing directly on the control’s effectiveness at a specific time. • It is self assessment as well as review of control design. • It is conducted by external or internal auditors. • Combined evaluations maintains its effectiveness over time.

  13. Deficiencies.. • Deficiencies i.e. conditions that affects an entity’s operation notices should be reported to top management. • Protocol should be established to identify what information is needed at a particular level for effective decision making. • Information generated in the course of operation is usually reported through normal channels, which means to the individual responsible for the function and also at least one level of management above the individual.

  14. Continued.. • Alternative communication channels should also exists for reporting sensitive information such as illegal and improper acts. • Monitoring internal control should include policies and procedures aimed at ensuring the findings of audits and other reviews are adequately and promptly resolved.

  15. Continued.. • Audit findings should be promptly evaluated. • Proper actions in response to finding should be determined and taken. • All actions should be taken within established time framed • Managers should resolved the matters early.

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