internal control testing a jargon-free * guide
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INTERNAL CONTROL TESTING A Jargon-Free * Guide. * Almost. Tim O’Toole – NYSICA Webmaster. Internal Control. also known as management control , refers to the combination of systems, processes and procedures in place that provide … - PowerPoint PPT PresentationTRANSCRIPT
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INTERNALINTERNALCONTROL CONTROL TESTINGTESTING
A Jargon-FreeA Jargon-Free** GuideGuide
* Almost
Tim O’Toole – NYSICA Webmaster
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Internal ControlInternal Control
• also known as management control, refers to the combination of systems, processes and procedures in place that provide …
• “reasonable assurance” that risks will be minimized, and results maximized (whether this is a far-reaching social program, or a routine administrative task.)
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““Reasonable assurance” Reasonable assurance” means just that.means just that.
• Any program or administrative task has inherent risks – the cost of doing business, and managers must take such risks into consideration in a cost-effective fashion.
• The cost of a management control must be proportionate to the risk.
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For Example…For Example…
• A pharmacy keeps serious narcotics (controlled substances) under lock and key, but stocks the public shelves with antihistamines and aspirin.
• Annual-salaried employees are trusted to keep track of their time and attendance, but additional management oversight is required for overtime.
• Program applicants submit qualifying information to caseworkers, but such information is subject to independent verification where appropriate.
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Internal Control Testing Internal Control Testing is generally of two types:is generally of two types:
• Ongoing testing/monitoring – built into standard procedures, supervisory oversight, employee evaluation and case review;
• Periodic evaluation – e.g., on a quarterly or annual basis, often conducted by a consultant or independent body, with emphasis on program results, cost-benefit analysis, and timeliness of services.
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Three TechniquesThree Techniques
• Observation – this is part of good supervision, applicable to factory assembly lines, OCFS residential programs, the classroom, workshop, kitchen, or office environments. It is especially useful when training a new employee to ensure results match expectations, and instructions are clear.
• Interview – asking questions – of staff, customers, clients, vendors, or peer professionals is often the only way to get to the bottom of a situation in a non-adversarial way.
• Documentation – this includes a review of items such as elevator inspection certificates, fire extinguisher recharging tags, time sheets, vouchers, program applications, day care center inspection reports, or even computer access logs.
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Two Sides of the Coin:Two Sides of the Coin:
• What are we trying to achieve? (Goals & Objectives)
• What are we trying to avoid? (Risks & Vulnerabilities)
If a risk does not interfere with results, why spend money and time trying to control it?
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Plain Talk About TestingPlain Talk About Testing
• You are the expert
• Internal Control will review your Survey
• Internal Control will review testing efforts on a selective basis…
• based on state and nationally recognized standards…
• e.g., Control Self-Assessment
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ObservationObservation
• If you’ve observed something happen more than once, you develop expectations.
• Staffing is based on significance, volume and complexity of activities
• Is reality in sync with your work plan?
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InterviewingInterviewing
• Interviewing starts with hiring• The interviewing technique reinforces
training • Interviewing continues to be used as a
management technique. • Managers filter information received,
compare it to on the job observations then check the documentation
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DocumentationDocumentation
• Documentation is more than a necessary evil
• Properly maintained records can control quality, quantity and timeliness of work
• Some types of documentation are required by law or procedure.
• The modern office is in transition to a paperless environment
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Digital InformationDigital Information
• has many added benefits.
• You can “filter” a lengthy report, looking for certain occurrences (e.g., dollar amounts over
$50, weekend use of cell phones or EZ-Passes), • or sort data in various ways to structure
specialized reports without re-keying of data.
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SamplingSampling
• Sampling is a common technique for reviewing documentation.
• Check 10% of a new employee’s output on a weekly basis (quality & quantity control)
• Do a 5% sample of a senior staffer on a monthly basis (for workload trends)
• Computers can sample 100% of digital records – looking for exceptions
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Your GoalYour Goal
• Efficient and effective programs• Identifiable and quantifiable results• Recognize risks and trends• Meet new challenges• Reduce errors• Avert fraud, waste and mismanagement• Ethics and integrity are built-in, not added-on