Most organisations will have some form of internal controls in place but how complete and comprehensive they are is a different issue.  In the previous post, 5 key areas were identified that will be elaborated on in more detail.  This is intended to provide a guide and a starting point that will help you build a checklist to develop your internal controls framework.  Note that the points listed below only scratch the surface to give you an indication of some areas to consider but in reality a complete list will be far more detailed and comprehensive.  For more information follow this link to the CPA Australia website and the publication they have that is titled Internal controls for small business.

The 5 key areas for the development of an internal controls framework are:

• Strategic:
• • There is a clear vision, mission and set of values for the organisation.
  • The Board have a well developed, effective governance and reporting framework.
  • There is a strategic plan that is supported by the Board and management that has clear objectives and goals.
  • There is a budget that accurately reflects the objectives and goals contained in the strategic plan.
  • The culture of the organisation supports and value internal controls.  If the management doesn’t lead by example then lack of respect with internal controls will permeate throughout the organisation and raise the level of risk. 
• Operational: 
• • The day to day business operations are in line with the strategic objectives of the organisation.
  • Ensure that operational policies and procedures are in place that reflects the day to day operations of the organisation.
  • There are clear occupational, health and safety standards in place that are effective and protect staff, volunteers and visitors to the organisation.  Staff are fully aware of these standards and have been trained as needed.
  • Segregation of duties, delegations and levels of authority are adhered to and respected.
  • Staff are properly supervised and receive appropriate feedback on work performance.
  • Information technology systems are properly set up and have appropriate levels of access, security and password control.  For example, these systems may relate to administration, financial, payroll, accounting, customer relationship management, online banking or even those used in providing specific services, logistics and manufacturing systems.
  • A human resource framework exists that includes, for example, clear position description statements, grievance procedures, recruitment and selection procedures.

The remaining 3 key areas of Assets, Financial and Risk are covered in the next post.