Internal Control

Internal Control is a process affected by an organization's governing board, management, administration, and personnel and is designed to provide reasonable assurance regarding the achievement of objectives in the following categories:

• effectiveness and efficiency of operations;
• reliability of financial reporting; and
• compliance with applicable laws and regulations.

This definition reflects certain fundamental concepts:

• Internal control is a process. It is a means to an end, not an end in itself.
• Internal control is affected by people. It involves not only policy manuals and forms, but also people functioning at every level of the organization.
• Internal control is geared to the achievement of objectives in several overlapping categories.
• Internal control can be expected to provide only reasonable assurance to an organization's leaders regarding achievement of operational, financial reporting, and compliance objectives.