INTERNAL

CONTROLS
Topic Outline Week 9
01 Why Controls?
02 Control Framework- COSO
03 Control Framework- CoCo

04 Other Control Models

05 Links to Risk Management
06 Control Mechanisms
07 Importance of Procedures
08 Integrating Controls
09 The Fallacy of Perfection
10 Internal Control Awareness Training
Topic 1
Why Controls?
INTERNAL CONTROL

Process of assuring of an
organization’s objectives in
operational effectiveness
1 and efficiency, reliable
financial reporting, and
2 compliance with laws,
regulations and policies.
3

4
Roles and MANAGEMENT BOARD
Responsibilities The Chief
Executive
Management is
accountable to
in Internal Officer (top
manager) of
the board of
directors,
Control the
organization
which provides
governance,
has overall guidance and
responsibility oversight.
for designing
and
implementing
effective
Internal Control.
Topic 2
Control Framework- COSO
What is the COSO Framework?
• The Committee of
Sponsoring Organizations
(COSO).
• Organized in1985 to
sponsor the National
1
Commission on Fraudulent
Financial Reporting.
• The COSO model defines
2
internal control as a
process, affected by an
3
entity’s board of directors,
management and other
4
personnel.
FIVE COMPONENTS
ICE BREAKER
MUNA TAYO MGA
SIS!
Topic 3
Control Framework- CoCo
What is the CoCo Framework?
• Developed by the
Canadian Institute of
Chartered Accountants.

1
• The Criteria of Control
(CoCo) is a further
2
control framework that
can mean more to
3 teams and individuals
and includes an
4 interesting learning
dynamic.
 CoCo Framework
01 02 03 04 05

PURPOSE COMMITMENT CAPABILITY ACTION MONITORING

AND
LEARNING

D
D
D
Topic 4
OTHER CONTROL
MODELS
COBIT ( Control Objectives for Information and
Related Technology)

- Created by Information System Audit and Control Association

(ISAC)

- Issued in 1996

Definition:
The policies, procedures, practices and organizational structures
are designed to provide reasonable assurance that business
objectives will be achieved and that undesired events will be
prevented or detected and corrected.
The Plan Do Check Act (PDCA) Model - COBIT

PLAN

DO ACT

CHECK
Direct impact on business
performance

Risk

Regulatory Environment
 ICE BREAKER!!

20 pigeons sat on
the branches of a
tree. A man shot 1
pigeon with his gun.
How many left on
the tree?
 ICE BREAKER!!
There are three important
rooms in a house. The first
one is filled with money. The
second one is filled with
important papers. The third
one is filled with jewelry. One
day all these rooms burst
into fire. Which room did the
policeman put out the fire in
first?
Answer: POLICEMEN DO NOT PUT OUT
FIRE BUT FIREMEN DOES
 ICE BREAKER!!

I’m tall when I’m

young and I’m
short when I’m old.
What am I?
Answer: CANDLE
Topic 5
LINKS TO RISK
MANAGEMENT
 OBJECTIVE
? RISK

Objective setting is pre-condition to risk management and risk

management is precondition to internal controls.
Topic 6
CONTROL MECHANISMS
CONTROL MECHANISMS

Control Mechanisms play

an important role in any
business organizations,
1 without which the roles of
managers get constrained.
2

4
 Types of Control

DIRECTIVE PREVENTIVE

DETECTIVE CORRECTIVE
Topic 7
IMPORTANCE OF
PROCEDURES
IMPLEMENTING PROCEDURES
 DEVELOPMENT

 INDUCTION

 THE TRAINING MANUAL

 OUTLINE

 TRAINING

 APPRAISAL

 DISCIPLINE

 THE REVIEW PROCESS

 COMPLIANCE
Topic 8
INTEGRATING CONTROLS
Fraud Errors
- Are made unknowingly by
- Is deliberate act done by
anyone who lacks knowledge
cunning person to mislead
or due to oversight on the part
people about the truth.
of the individual.

Performance Communication Policy

ICE BREAKER!!
Topic 9
THE FALLACY OF
PERFECTION
Controls tend to cost money and slow organization down

Control cannot guarantee success

Controls is effected through people

Topic 1O
INTERNAL CONTROL
AWARENESS TRAINING
 Staff
awareness
training

IDEAS

PRACTICE
Thank You
PASS THE
MASSAGE!
CONSEQUENCES:

Kunin ang bato(invisible) at

gayahin ang famous line
ninDarna.

“ Ding and bato! DARNA!!!”