internal control

Thân thiện

An accountant reviews the company's internal control procedures.

Definition

Noun: A system of policies, procedures, and activities established within an organization to provide reasonable assurance regarding the achievement of objectives in the following categories: * Effectiveness and efficiency of operations. * Reliability of financial reporting. * Compliance with applicable laws and regulations. * Safeguarding of assets against loss, fraud, and error.

Usage

"Internal control" is a singular, non-count noun when referring to the overall system or concept. It is a standard term in business, accounting, finance, and auditing. It describes a framework for managing risk and ensuring organizational integrity.

Examples

• The company's internal control over financial reporting was found to be effective by the external auditors.
• Strong internal control is essential for preventing employee theft.
• A key component of internal control is the separation of duties, where no single employee handles all aspects of a transaction.
• The audit committee is responsible for overseeing the effectiveness of the internal control system.

Advanced Usage

• Internal Control Framework: A structured guide for designing, implementing, and evaluating internal controls. The most widely used framework is the COSO (Committee of Sponsoring Organizations of the Treadway Commission) framework.
  • Example: "The organization aligned its processes with the COSO internal control framework."
• Internal Control over Financial Reporting (ICFR): A specific subset of internal controls focused on the preparation of reliable financial statements.
  • Example: "Management must assess and report on the effectiveness of internal control over financial reporting."
• Internal Control Environment: The foundation of an internal control system, encompassing the integrity, ethical values, and competence of the organization's people.
  • Example: "A weak internal control environment increases the risk of fraud."

Variants and Related Words

• Internal Check: An older, more specific term referring to methods where the work of one person is verified by another as part of routine procedures.
• Internal Audit: An independent, objective assurance function that evaluates the effectiveness of internal control, risk management, and governance processes.
• Control Activity: A specific policy or procedure (e.g., approvals, authorizations, reconciliations) that is part of the internal control system.
• Internal Controller (rare in this context): More commonly, a person holding this title is involved in financial management. The function is typically called "internal control."

Synonyms

• Control System
• Checks and Balances (broader, often political)
• Safeguards
• Procedural Controls

Related Phrases

• Design of Internal Control: Refers to how controls are structured and implemented.
  • Example: "The design of internal control was adequate, but its operating effectiveness was not tested."
• Operating Effectiveness of Internal Control: Refers to whether a control is operating as designed and whether the person performing the control possesses the necessary authority and competence.
  • Example: "We tested the operating effectiveness of internal control throughout the year."
• Internal Control Deficiency / Weakness: A flaw in the design or operation of a control that reduces the likelihood of achieving an objective.
  • Example: "The auditor identified a significant internal control deficiency in the cash disbursement process."

Idioms

• To have internal controls in place: To have established and implemented a system of internal control.
  • Example: "It is the board's duty to ensure the company has adequate internal controls in place."

Học thuật

Noun

1. an accounting procedure or system designed to promote efficiency or assure the implementation of a policy or safeguard assets or avoid fraud and error etc.