Risk and Compliance: Internal Controls

AboutTexas A&M AgriLife (AgriLife) is committed to upholding the highest standard of ethical conduct and compliance with the legal obligations of the AgriLife components. In support of these efforts, the AgriLife Risk and Compliance Office has been established within AgriLife Administrative Services to provide risk and management advisory services, as well as to promote compliance with applicable federal, state, Texas A&M University System, and agency laws, policies, regulations, rules, and procedures.

 

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internal-controlsInternal controls are processes and procedures put in place by the agency to:

  • Safeguard the agency’s assets
  • Ensure that records are accurate
  • Promote the effectiveness and efficiency of operations
  • Encourage adherence to policies
  • Ensure compliance with laws, regulations, and contracts

Controls can be classified into two types:

Preventative Controls—are designed to catch or prevent errors and irregularities up front, before they occur. Examples of preventative controls include the provision of procedure manuals and training, separation of duties in accounting processes, proper approval of transactions, the requirement of adequate documentation for transactions, and physical security measures such as locking doors and otherwise controlling assets.

Detective Controls—are designed to find errors or other issues after they occur so that corrective action can be taken. Examples include taking physical inventories of assets to compare to recorded assets, reconciliations of bank and accounting records, variance analysis, and periodic audits and reviews.

Benefits and responsibilitiesThe benefits of control procedures must be compared to the costs of implementing those controls. In general, the earlier an issue can be detected, the cheaper and faster corrective action can be taken. That is why strong preventative controls are so important in agency operations

The responsibility for internal controls ultimately rests with management, but the Risk and Compliance office is here to assist management in the design and implementation of controls.

 

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 Texas A&M AgriLife Risk and Compliance / 979-845-7879

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