- Finance & Real Estate
- Internal Control
In the 2015 Indiana General Assembly, state legislators passed legislation on internal control in local government. Under Indiana Code 5-11-1-27, all political subdivisions in Indiana must maintain a system of internal control to promote accountability and transparency. The legislative body of each unit must adopt internal control standards and provide training to staff. Further, the fiscal officer of each unit must certify, beginning in early 2017, that the standards were adopted and the training provided.
The statute applies to all political subdivisions, including counties, townships, school corporations, libraries, and municipalities.
What is Internal Control?
Internal control is generally defined as a process that provides reasonable assurance that an entity is meeting its objectives in the areas of reliability of financial reporting, effectiveness and efficiency of operations, and compliance with laws and regulations. As defined by the Indiana State Board of Accounts:
- "Internal control is a process executed by officials and employees that is designed to provide reasonable assurance that the objectives of the political subdivision will be achieved;
- It is a basic element fundamental to the organization, rather than a list of added on tasks;
- It is an adaptable process that is a means to an end, not an end in itself;
- It is focused on the achievement of objectives; and
- It is dependent on officials and employees for effective implementation."
(Source: Uniform Internal Control Standards for Indiana Political Subdivisions, SBOA)
For More Information
Here are additional sources of information for internal control.
State Board of Accounts: The SBOA's internal control standards, along with the state training video and other materials, are online at the following link: SBOA Internal Control
United States Government Accountability Office: The GAO's Standards for Internal Control in the Federal Government, also known as the GAO Green Book.