Standards for private organizations

2020 Edition

Financial Management (FIN) 2: Internal Control Environment

The organization establishes an internal control environment that promotes ethical financial management and includes mechanisms for:
  1. conducting ongoing monitoring of the effectiveness of internal control policies and procedures;
  2. management review by more than one individual;
  3. assuring that management directives are carried out;
  4. prevention of error, mismanagement, or fraud;
  5. safeguarding and verification of assets; and
  6. segregation of duties to the extent possible.
2020 Edition

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Purpose

The organization's ability to achieve its mission is based on sound financial management practices that ensure efficient, data-informed use of its resources.
1
The organization's practices reflect full implementation of the standard.
2
Practices are basically sound but there is room for improvement; e.g.,
  • One of the elements are not fully addressed.
3
Practice requires significant improvement; e.g.,
  • Two elements are not fully addressed;
  • One element is not addressed at all.
4
Implementation of the standard is minimal or there is no evidence of implementation at all; e.g.,
  • Fraudulent practices or serious financial mismanagement have occurred, and problems have not been remediated; or
  • Three or more elements are not fully addressed; or
  • Two elements are not addressed at all.
Self-Study EvidenceOn-Site EvidenceOn-Site Activities
  • Internal financial control manual that includes policies and procedures
  • Governing body minutes where establishment of or compliance with internal controls were discussed
  • Interviews may include:
    1. Governing body
    2. Governing body treasurer
    3. CEO
    4. CFO