2010-01-AU Limited Scope Performance Audit of Department of Water Supply's Internal Controls for Cash Handling and Financial IT Systems

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CHAPTER 2: INTERNAL CONTROL CRITERIA organizational objectives. Control activities occur throughout the organization at all levels and in all functions. They include a range of activities as diverse as approvals; authorizations; verifications; reconciliations; reviews of operating performance; security of assets; and segregation of duties. Component No. 4: Information and Communication — Pertinent information must be identified, captured, and communicated in a form and timeframe that enable employees to carry out their responsibilities in an effective and efficient manner. Information systems produce reports containing operational, financial, and compliance - related information that help management run and control the organization. Effective communication must also occur in a broader sense by flowing down, across, and up the organization. All personnel must receive a clear message from management that control responsibilities must be taken seriously. They must understand their own role in the internal control system, as well as how their individual activities relate to the work of others in the organization. Component No. 5: Monitoring — Internal control systems need to be monitored — a process that assesses the quality of system performance over time. This is accomplished through ongoing monitoring activities, separate evaluations, or a combination of the two. Ongoing monitoring occurs during the course of operations, and includes regular management and supervisory activities as well as other employee activities. The scope and frequency of separate evaluations will depend primarily on an assessment of risks and the effectiveness of ongoing monitoring procedures. Internal control deficiencies should be reported upstream, with serious matters reported to top management and governmental leaders. Source: http:// www. coso. org/ IC- IntegratedFramework- summary.htm 7