Internal Control Principle-Based Approach Birzeit Consulting ME Economics and Management UK, Europe, Middle East
Nov 13, 2014
2. What is Internal Control
3. Reliability of financial reporting 4. Effectiveness and
efficiency of operations 5. Compliance with applicable laws and
regulationsIn 1992
The Committee of Sponsoring Organizations of the Treadway
Commission (COSO)
Internal Control Integrated Framework to help businesses and other
entities assess and enhance their internal control systems
UK, Europe, Middle East
6. What is the Traditional Thought about Internal Control
(IC)
7. Accounting IC system(s) 8. Information Technology IC
system(s) 9. Hospitals IC system(s) 10. University, colleges,
schools IC system(s) etc..UK, Europe, Middle East
11. Is There a Discipline for Internal Control (IC)
Internal Control has five components:
1. Control Environment: the overall tone of the organization
2. Risk Assessment: managements identification of risk
3. Information and Communication Systems: a means of recording
transactions and communicating responsibilities
4. Monitoring: assessment of internal control performance over
time
5. Existing Control Activities: control policies and
procedures
Each of these components has several Principles
Each Principle has several attributes
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12. Internal Control-Integrated Approach
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13. What Makes Us Different
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14. What Makes Us Different (cont.)
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15. What Makes Us Different (cont.)
Any entity must have strategies to achieve its ultimate goals and
justifies its existence
The valid presumption is that entitys processes are objective
oriented
Each aspect of an entitys strategy utilizes information produced by
its information systems
The entity exists in a dynamic environment (CHANGE)
PEOPLE is who set and implement corporate strategy and internal
controls. Internal control is the DNA of any entity
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16. What Makes Us Different (cont.)
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Feedback
Internal Control
17. What Makes Us Different (cont.)
We assess, design, implement and audit internal control system(s)
using a:
Principle-based, and
Risk-based, and
Process-based approach
We integrate the information theory and information technology in
our approach
It is a new mind set of how to approach internal control system(s)
of ANY entity based on the COSO Internal control components,
principles, attributes and literature
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18. Do We Need Internal Control System(s)
Absolutely yes and in EACH entity.
Proper and adequate internal control system(s) are needed and a
prerequisite for efficient and effective:
Corporate governance
Internal audit
Decision making process(es)
Risk management
Marketing activities
Reliable financial reporting
Operations activities
Compliance with rules and regulations
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19. Do We Need Internal Control System(s) (cont.)
Access to capital markets
Merger and acquisition
Human resources polices and procedures
Processes to fight fraud
Management practices and innovation
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20. Do We Need to Audit Internal Control System(s)
Yes. We do need to audit (maintain) internal control system(s)
because:
People change.
Environment ( internal and external) changes
Change is continuous and entities exist in a dynamic not static
environments
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21. Thank You
We thank you for your time and we will be glad to answer your
questions
You may contact us at our e-mail: [email protected] or our contact
details listed at our website www.bzconsult.com
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