Internal control in public administration

Internal Control is a process carried out by the Senior Management of an organization and must be designed to give reasonable security, in relation to achieving the objectives previously established in the following basic aspects: Effectiveness and efficiency of operations; reliability of financial reports and compliance with laws, rules and regulations, which frame administrative action.

Role of Internal Control

A definition taken from the document known as Standars (Standars for the Professional Practice of Internal Auditing, 1997) says:

“Internal Control is defined as any action taken by Management to increase the probability that the established objectives and goals have been met. Management establishes Internal Control through the planning, organization, direction, and execution of tasks and actions that give reasonable assurance that the objectives and goals will be achieved. ”

Standars also establishes that the primary objectives of Internal Control must achieve:

Reliability and integrity of information. Compliance with policies, plans, procedures, laws and regulations. Safeguarding of assets. Efficient and economic use of resources. Compliance with established objectives and goals of operations and programs.

As seen, Internal Control is a universal concept that is applied interchangeably in all companies and especially in countries with high managerial development.

If this is the situation of Comparative Internal Control, in Colombia all the Directors of public organizations require a better and proactive assurance of the development of the control and especially, of the detection of potential problems. Internal Control implies the dissemination of responsibility to all individuals in an organization for the prevention of risks and to avoid chance in administrative action. This requires high and clear communication between the members and the assurance of adequate coordination and, most importantly, the responsibility and commitment of all.

It is of paramount importance to emphasize that Internal Control, no matter how well it has been designed and operated, can only give Top Management reasonable assurance about achieving its objectives. The probability of achievement and effectiveness of the System is affected on many occasions, by limitations inherent in the Internal Control System.

These limitations may include failures in decisions made regarding the entity's policy, failures in the design of costs vs. benefits, excesses of the Management, failures in the control due to the people who join to circumvent the controls or simply errors of the different members of the organization.

This methodology, which is presented on the Internal Control System, is not intended to dogmatize, but to enrich the conceptual bases that have been cultivated in one way or another within the Municipality of Palmira.

EVALUATION AND ITS IMPORTANCE IN PUBLIC ADMINISTRATION

According to the Dictionary of the Royal Academy of the Spanish Language, "to evaluate is to give value to a thing". From the point of view of social processes: evaluating is comparing, at the given moment, what has been achieved through an action, with what should have been achieved according to previous programming.

Evaluation and control in public administration have the fundamental role of helping people and organizations to grow in all their dimensions.

In accordance with the above, evaluating requires prior knowledge of a situation, in such a way that it facilitates measuring its improvement. If the two moments of knowledge are different, the objective of the evaluation is to measure the effects of a program or a project, through an analytical and technical process between what is planned and what is executed that determines the degree (indexes) of successes and failures according to the results.

Permanent evaluation facilitates continuous improvement, therefore it is pertinent to answer the following questions:

What to evaluate Where to evaluate When to evaluate How to evaluate With what resources to evaluate?

Activities capable of being evaluated

The following aspects must be adequately guaranteed in each operation and in each process that is executed in the organization.

Aspects to recognize in the evaluation of Internal Control

Basic purchasing operations

Purchase planningTechnical data sheetsMarket studyPrice controlPost-purchase follow-upSupplier qualificationQuality and opportunityQuote request

Basic warehouse operations

Receipt of goods Proper storage Register and kardex Daily, monthly and annual reports Internal controls Merchandise dispatch

Basic operations in Treasury, Budget and Accounting

Daily Reports Proof of income Proof of expenditures Reconciliations Prior control Availability Financial statements Working Capital Management (Cajas Mayores y Menores; Banks, Short-term investments)

Basic operations in Human Resources

Registration and payroll report Training Induction Overtime review Performance evaluation Personnel selection

General Operations

Compliance with the Function Manual Application of Processes and procedures Quality decision making Information systems

KEY POINTS to evaluate with internal control

The key points of Internal Control are described in the following table.

Table 1. Key Points of Internal Control

Requests	Receipt documents
Receipt minutes	Physical stocks
Conditions of conservation	Security
Order and cleanliness	Teams
Reports	Systematization
Operational plans	Warehouse reports
Purchase Notes	Budget goals
Providers	Purchase method
Purchase order	Prices
Order documents	Invoice and support
Budget availability

INTERNAL CONTROL ALERTS

Warehouse Control Alerts

Availability of assets Maintenance of assets Quality of assets Prices Inventory status Consumption Related processes

Alerts from Treasury, Accounting and Budget

AvailabilityReservesAppropriationsContractsActs and recordsSupportsLegalityFinancial controlRegistrationsFaults

Alerts from staff

Entry and exit times Extra hours Commissions Vacations Licenses Permits Discounts (Parafiscal, embargoes, etc.)

Alerts from Purchases

TechnologyBudgetSpecificationsPricesSuppliersQuotationsLicitations

Alerts from general operations

User complaints Evidence of disciplinary offenses Increased failure and error rates Service slowness

DEPENDENCIES TO EVALUATE

All the dependencies of the Administration are susceptible to evaluate, by means of the criteria stated above.

WHEN TO ASSESS

The evaluation must obey previously defined forecast criteria, this means that there must be a whole Planning process that must contain:

Annual Audit PlansMonthly Audit Plans

The most used methodology is that of projects, this means that it must be established in advance:

Name of the audit project Sector of the administration to be audited Start date End date

Below is an example of a schedule:

Example of a Control Schedule

The schedule allows to know the officials of the Internal Control Advisory Office, how they will work during the year and the dates of the audits, a situation that positively influences their preparation and coordination.

Similarly, specific audits are carried out, detailing fundamental aspects of the evaluation of each process. The plan would contain the following points:

Name of the audit project (Process to be evaluated) Proposed General Objective Specific Objectives Activities to be developed Start date End date Report delivery date Responsible Auditor Resources to use