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Internal Control Definition

Internal control is a process put in place by the board of directors, senior management and all levels of personnel to provide reasonable assurance that an organization's objectives will be achieved. Internal control includes all measures and practices that are used to mitigate exposures to risks that could potentially prevent an organization from achieving its objectives. Internal control is not solely a procedure or policy that is performed at a certain point in time, but rather it is continually operating at all levels within an organization.

The board of directors and senior management are responsible for establishing the appropriate culture to facilitate an effective internal control process and for continuously monitoring the effectiveness of the internal control system; however, each individual within an organization must participate in the process.

The main objectives of the internal control process can be categorized as follows:

• Safeguarding of assets (security objectives);

• Efficiency and effectiveness of operations (operational objectives);

• Reliability and completeness of accounting/financial and management information (information objectives); and,

• Compliance with organizational policies and procedures as well as applicable laws and regulations (compliance objectives).

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