RMIT University
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Internal controls within management systems are the checks and balances incorporated into University practices, policies and procedures. The objective is to arrive at an optimum minimum number of controls commensurate with the level of risk. For example, different controls are required for the accreditation of a new undergraduate degree course, enhancements to an existing subject within an approved course or the delivery of an existing course at an additional venue (say, offshore).

The objective of internal controls is to safeguard assets, comply with relevant laws and regulations, ensure the accuracy and reliability of management data, promote operational efficiency and encourage adherence to prescribed managerial policies.

(Internal Control requirements and responsibilities is also referred to in the "Easy Guide to Finance Procedures at RMIT" - a quick reference to finance procedures for administration and technical officers.)

There are five primary components of internal control:
 
>Control Environment
>Risk Assessment
>Control Activities
>Information and Communication
>Monitoring

Control Environment

This component represents the level of awareness of management and staff and their attitude towards management's control of activities. It affects the way in which people conduct their activities, assess risk, carry out their control activities, and capture and communicate relevant information. Establishing a strong control environment involves setting standards for, and displaying human qualities such as integrity and ethical values in an admirable manner.

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Risk Assessment

This component represents the balance of the control environment with the risks and potential consequences associated with activities. An optimum minimum level of control commensurate with risk is the objective. This maximises efficiency while providing an adequate level of security and control over tasks.

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Control Activities

Control activities include the actions taken to protect assets and address risks. These include appropriate approvals and checks on
accuracy of data. They are incorporated into policies, procedures and practices. Their effectiveness relies on the level of compliance by management and staff.

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Information and Communication

The effective and appropriate communication of management information to key staff in a timely manner is essential for proper
decision making. The dissemination of strategic goals, financial data, policies and procedures, management initiatives and responses to external changes ensures effective performance.

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Monitoring

Monitoring the management process maintains quality systems by providing data on performance. This will highlight any problem
areas and allow early intervention and review to meet changing circumstances or needs. Systems need to be viewed as dynamic,
responding to changes and open to improvement and refinement.

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Last Modified 9 September 1998 by Kieran Dell
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