COFAR Webinar Discusses How Much Internal Control Is Enough

October 7, 2014 | By Jerry Ashworth | Post a Comment

sleep-893666-mCall it the “pillow test.” Or perhaps the “snooze factor.” These seemed to be good terms to use for determining the level of internal control that a recipient needs under the uniform grant guidance after hearing from a couple of key officials in the audit community during a webinar hosted last week by the Council on Financial Assistance Reform.

During a panel discussion on internal control, the question was raised as to how a nonfederal entity would know if the standards it establishes for internal control will be sufficient under a single audit. Mandy Nelson, a partner with KPMG’s Department of Professional Practice, admitted that there “clearly will be a lot of judgment” in determining whether a nonfederal entity’s internal control policies and procedures meet the requirements in §200.303, which states that nonfederal entities “must establish and maintain effective internal control over the federal award that provides reasonable assurance that the nonfederal entity is managing the federal award in compliance with federal statutes, regulations and the terms and conditions of the federal award.”

However, Nelson and Brett Baker, assistant inspector general for audit at the National Science Foundation Office of Inspector General, both concluded that the internal controls should reach a certain comfort level. “The question will be asked, ‘How do you sleep at night?’” Nelson said. Added Baker, “Internal controls are designed to help you sleep at night. From our standpoint in the federal government, we want to make sure controls are in place and that systems are looked at closely.”

So that’s what it boils down to. When developing your internal controls for your grant programs, may sure you develop internal control policies and procedures to that you can sleep soundly and not worry that there are deficiencies within the program. This will require a full review of all grant processes and systems, so don’t take it lightly. Nelson even suggested getting an auditor involved in the internal control design phase. It’s always better to know early on that the controls planned will work than it would be to find them deficient later on.

So now that you’ve read this, sleep on it and then make sure your internal controls are sufficient enough to help you continue to sleep.

What internal control questions do you have? Let us know.


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