Establishing Good Internal Controls

Internal controls should be proactive, value-added, and cost effective. To establish good internal controls administrators must:

• Identify the unit goals for operations as they relate to the mission (education, research, and public service).
• Identify the unit goals for finance and administration (budgets and human resource management).
• Identify the unit compliance goals.
• Identify and evaluate the risks and conflicts to the accomplishment of those goals. This can be accomplished through discussions with upper management and the Office of Internal Audit or through benchmarking with similar units within the university or with similar institutions.
• Establish written policies and procedures that minimize material risks and conflicts and incorporate key internal controls.
• Provide the policies and procedures and appropriate training to staff to encourage compliance.

In the best case scenario, poor internal controls result in increased bureaucracy, reduced productivity, increased complexity, increased time to process transactions, and increased non-value activities. In the worst case, poor internal controls interfere with the accomplishment of the unit’s goals and objectives and allow for misuse or abuse of assets.