Internal controls is the latest term in this weekly feature I first introduced here on Exceptional EA in 2015.

Internal controls document practices or procedures designed to help mitigate risks including human error, fraud, conflict of interest (actual, perceived or potential) and more. In addition to reflecting expectations associated with identification and declaration of conflicts of interest, policies and procedures may also involve the following.

• approval requirements
• physical controls
• internal audits to ensure operational effectiveness/efficiency
• segregation/separation of duties
• transaction and activity reviews and reconciliations

Examples:

An assistant will prepare minutes of a meeting, and the committee/board will review/approve the minutes.

In developing its proposed annual operating budget, management will periodically present plans in progress to the board for review and feedback/recommendations. The board will have had exposure and input to the budget prior to the meeting at which management presents its proposed budget for board approval.

One person will prepare a journal entry, and another will review/approve it.

An Accounts Payable employee in receipt of a request for changes to a vendor‘s financial institution information will submit the request it to a colleague one level up for review/approval before processing the change.

If you’d like to elevate your group’s acumen, and awareness of risk management, I can help. Click here to drop a note to enquire about having me present my Introduction to Risk Management training session for your team or conference.

Why should you turn to this weekly feature? A strong vocabulary can contribute to our career success. Whether you’re conversing with senior colleagues, other stakeholders or your peers, the extent to which you’re familiar with language used around executive tables can impact others’ perceptions of your professionalism and business insights. It’s also helpful to ensure currency with terminology used in meetings you may attend or record.

Check here each Wednesday, or on whatever days you like, for additional words to help maintain or elevate your currency with business terminology. Enter the term “Wednesday’s Words” in the search field any time you visit, and happy reading!