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Birzeit Consulting internal control principles based approach


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This is our business methodology and insight about internal control: concept; methodology; components; principles; attributes and its audit

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Birzeit Consulting internal control principles based approach

  1. 1. Internal Control Principle-Based Approach Birzeit Consulting ME Economics and Management UK, Europe, Middle East
  2. 2. What is Internal Control • IC is a process-effected by those charged with governance, management and other personnel-designed to provide reasonable assurance about the achievement of the entity’s objectives with regard to – Reliability of financial reporting – Effectiveness and efficiency of operations – Compliance with applicable laws and regulations • In 1992 – The Committee of Sponsoring Organizations of the Treadway Commission (COSO) • Internal Control – Integrated Framework to help businesses and other entities assess and enhance their internal control systems UK, Europe, Middle East
  3. 3. What is the Traditional Thought about Internal Control (IC) – Administrative IC system(s) – Accounting IC system(s) – Information Technology IC system(s) – Hospitals IC system(s) – University, colleges, schools IC system(s) etc….. UK, Europe, Middle East
  4. 4. Is There a Discipline for Internal Control (IC) • Internal Control has five components: • 1. Control Environment: the overall tone of the organization • 2. Risk Assessment: management’s identification of risk • 3. Information and Communication Systems: a means of recording transactions and communicating responsibilities • 4. Monitoring: assessment of internal control performance over time • 5. Existing Control Activities: control policies and procedures • Each of these components has several Principles • Each Principle has several attributes UK, Europe, Middle East
  5. 5. Internal Control-Integrated Approach UK, Europe, Middle East
  6. 6. What Makes Us Different Corporate Strategy (SWOT) • Resources • Planning • Processes • Strategic Objectives • Feedback • Internal Control principle-based, Risk-based and Process-based approach UK, Europe, Middle East
  7. 7. What Makes Us Different (cont.) Internal Control Mission and SWOT Resources and Planning Policies and Procedures Strategic Objectives Feedback UK, Europe, Middle East
  8. 8. What Makes Us Different (cont.) • Any entity must have strategies to achieve its ultimate goals and justifies its existence • The valid presumption is that entity’s processes are objective oriented • Each aspect of an entity’s strategy utilizes information produced by its information systems • The entity exists in a dynamic environment (CHANGE) • PEOPLE is who set and implement corporate strategy and internal controls. Internal control is the DNA of any entity UK, Europe, Middle East
  9. 9. What Makes Us Different (cont.) Policies and Procedures People and Resources Operations and Processes Objectives UK, Europe, Middle East Feedback Internal Control
  10. 10. What Makes Us Different (cont.) • We assess, design, implement and audit internal control system(s) using a: – Principle-based, and – Risk-based, and – Process-based approach – We integrate the information theory and information technology in our approach • It is a new mind set of how to approach internal control system(s) of ANY entity based on the COSO Internal control components, principles, attributes and literature UK, Europe, Middle East
  11. 11. Do We Need Internal Control System(s) • Absolutely yes and in EACH entity. • Proper and adequate internal control system(s) are needed and a prerequisite for efficient and effective: – Corporate governance – Internal audit – Decision making process(es) – Risk management – Marketing activities – Reliable financial reporting – Operations activities – Compliance with rules and regulations UK, Europe, Middle East
  12. 12. Do We Need Internal Control System(s) (cont.) – Access to capital markets – Merger and acquisition – Human resources polices and procedures – Processes to fight fraud – Management practices and innovation UK, Europe, Middle East
  13. 13. Do We Need to Audit Internal Control System(s) • Yes. We do need to audit (maintain) internal control system(s) because: – People change. – Environment ( internal and external) changes – Change is continuous and entities exist in a dynamic not static environments UK, Europe, Middle East
  14. 14. Thank You • We thank you for your time and we will be glad to answer your questions • You may contact us at our e- mail: or our contact details listed at our website UK, Europe, Middle East