Internal Controls

What are internal controls?

Establishing internal controls is the creation of a process that ensures public resources go to the correct places usually through policies, practices, and procedures developed by agencies. Key elements of internal controls include:

  • Organizational structure, as documented through organization charts and position descriptions
  • Policies and procedures, including hiring policies
  • Separation of duties, especially related to the handling of revenue and expenditures
  • A secure recordkeeping system
  • Regular reconciliation of budgets and records

Looking for definitions of the common CoC and ESG Program terms referenced throughout the Virtual Binders?

Virtual Binders Glossary

Why is it important to implement internal controls?

Internal controls can help:

  • Protect assets
  • Ensure compliance with policies, rules, regulations, and laws
  • Prevent errors and deceptive practices
  • Verify accuracy of accounting
  • Produce reliable and timely financial data
  • Provide accurate information for oversight of programs and operations
  • Achieve organizational mission and goals

The Office of Inspector General provides some ground rules and examples of how to set up and maintain these internal controls in the Implementing the Five Key Internal Controls article.