Internal Controls (Part I)
Prepared by: Dr. Savanid (Nui) Vatanasakdakul

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Concept of Corporate Governance
Concept of IT Governance
Internal Control
COSO Framework
Preventive, Detective and Corrective Controls

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Provide a real-life examples of organisational failures and of the firm(s) in which they occurred? 3

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The way companies are managed to create value, enforce accountability and control, and manage risks. (Blair and Boyce, 2006)
An elaborate system of checks and balances whereby a company’s leadership is held accountable for building shareholder value and creating confidence in the financial reporting processes. (Turner & Weickgenannt, 2009)

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Corporate governance starts at the top levels of an organisation
The system by which companies are directed and managed
 How company objectives are set and achieved
 How risk is monitored and assessed
 How performance is optimised

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Lay solid foundations for management and oversight Structure the board to add value
Promote ethical and responsible decision-making
Safeguard integrity in financial reporting
Make timely and balanced disclosures
Respect the rights of shareholders
Recognise and manage risk
Encourage enhanced performance
Remunerate fairly and responsibly
Recognise the legitimate interests of stakeholders
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The system by which companies are directed and managed. It influences how the objectives of the company are set and achieved, how risk is monitored and assessed and how performance is optimised

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Areas to be considered: o o o o o Adding value
Managing risk
Managing IT strategy
Measuring performance
Managing resources

Addresses: oIT principles oIT infrastructure oIT architecture oIT investment & prioritisation 9

1. Plan

and organise

2. Acquire
3. Deliver

and implement

and support

4. Monitor

and evaluate

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Internal control systems are part of an organisation’s corporate governance structure. They help the organisation meet its objectives. Internal Controls (IC) aim to provide a reasonable assurance that objectives will be achieved. The control framework is called the Internal
Control Structure.

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Provide a real-life examples of internal control in the following situation.
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Family
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University
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Workplace

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Committee

Of Sponsoring Organisations of the Treadway
Commission – Enterprise Risk Management Framework

(Blair & Boyce, 2006)
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Effectiveness and efficiency of operations
◦ Efficiency: Use of resources
◦ Effectiveness: Achieving the intended purpose
Reliability of financial reporting
◦ Are the amounts in the reports accurate?
Reliable? Timely?
Compliance with applicable laws and regulations
◦ Does the control system ensure we meet legal obligations (financial reporting, other obligations)? 16

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Functions: Accounting and Finance, Human
Resources, Sales and Marketing, Production…
Units: Departments, Divisions, Teams,
Committees, boards…

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Control environment
◦ The overall attitude, actions and awareness towards internal control and its importance.
Risk assessment
◦ Understand the business objectives and processes and ask
“what could go wrong?”, “how could this process fail?”
Control activities
◦ The procedures that are implemented to address the risks identified in the risk assessment.
Information and communication
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