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Business and Financial Policies and Procedures

How Internal Controls Protect You and Your Unit

Internal control is a term used to describe a variety of procedures that prevent or detect unintentional misstatements (errors) or intentional misstatements (irregularities). There are 4 general types of internal controls:

  • Directive - Procedures to communicate what the rules are, or what should happen. For example, posted safety procedures or policies and procedures at the University, campus, and unit levels are directive controls.
  • Preventive - Procedures to keep errors or irregularities from happening. For example, designation of approval authority and spending limits are preventive measures.
  • Detective - Procedures to identify errors or irregularities as they happen or shortly after they happen. For example, budget variance reports are detective controls.
  • Corrective - Procedures to correct any errors that were found by the detective internal controls. For example, when an error is made, employees should follow whatever procedures have been put into place to correct the error, such as reporting the problem to a supervisor. Training to strengthen staff knowledge in areas where weaknesses are identified is another example of a corrective internal control.

All University Employees
All the policies and procedures in the OBFS Business and Financial Policies and Procedures Manual provide operational details of the University's internal control framework. All University employees are responsible for following these policies and procedures and the specific internal control requirements of their supervisor and unit.

Internal control procedures protect employees by providing a built-in series of practices and structures to verify that transactions and resources have been processed or used appropriately. For example, all P-Card purchases are approved or reconciled by someone other than the original purchaser. This validates the accuracy of the transaction and helps monitor the appropriateness of the purchase.

Unit Administrators and Supervisors
Unit administrators and supervisors are responsible for ensuring that appropriate internal control policies and procedures are in place. In addition to knowing what good internal controls are, unit heads and supervisors must ensure that those controls are implemented and that staff follow them. Consult the Internal Control Tools at the Office of University Audits website for additional information and training.

Good internal control policies:

  • Help protect the good reputations of unit administrators and staff
  • Demonstrate good stewardship to state, granting agencies, donors and taxpayers
  • Help ensure efficient/effective use of your unit resources
  • Help protect against misuse of resources, adverse audit findings and negative media coverage

9.1 Comply with Unit Head Responsibilities for Internal Control

Additional Resources

Internal Control Tools
Request Internal Control Training
For step-by-step directions for various business procedures, consult Job Aids and Training Materials

Last Updated: December 8, 2014 | Approved: Senior Associate Vice President for Business and Finance | Effective: December 2014

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