Internal Control Evaluation Of The Financial Department

Internal control evaluation of the financial department

Introduction

With respect to the provisions of internal control, it is an expression that we use in order to describe the actions adopted by the directors of entities, managers or administrators, to evaluate and monitor operations in their entities. The internal control system includes the organization’s plan and all coordinated methods and measures adopted within a company in order to safeguard its assets and verify the reliability of accounting data. 

On the other hand, it also tells us that internal control is the set of actions, activities, plans, policies, norms, records, procedures and methods, including the environment and attitudes that authorities and their staff develop, with the aim of preventing possiblerisks that affect a public entity. Internal control is based on five functional components which are: control environment, risk assessment, management control activities and information and communication supervision.

Developing

The guarantee of transparency in economic management developed by a local entity requires that its financial activity be subject to various internal control procedures that can be specified in three aspects:

It begins with the formal commitment of senior management and the constitution of a committee responsible for conducting the process. It also includes the actions aimed at formulating a diagnosis of the situation in which the entity’s internal control system is found with respect to the control standards, which will serve as the basis for the elaboration of a work plan that ensures its implementationand guarantee the effectiveness of its operation.

It includes the development of the actions provided for in the work plan. It occurs at two sequential levels: at the entity level and at the process level. In the first level, the necessary control policies and regulations are established for the safeguarding of the institutional objectives under the framework of the internal control standards and components that they establish;While in the second, based on the critical processes of the entity, after identification of the objectives and risks that threaten their compliance, the existing controls are evaluated in order to ensure the obtaining of the response to the response tothe risks that the administration has adopted.

Phase that includes the actions aimed at achieving an appropriate process of implementation of the internal control system and its effective functioning, through its continuous improvement.

conclusion

To end internal control in companies, it is an inescapable task for those who want to achieve competitiveness in their business;Since a company that implements internal controls decreases the occurrence of errors and fraud in financial information, regulatory entities will catalog it as a company that meets laws and regulations and in turn will generate a positive impact on their business, being able to even attract investorsthat they bet on its growth of which their purpose is to ensure that the economic-financial activity of the local entity is adapted to the principles of legality, economy, efficiency and efficiency. 

This control also contributes to strengthening transparency before the citizen of the local entity accounts, so that they provide reliable and complete information about the developed management. In the Spanish local administration the internal control of each entity is attributed to local intervention