Managers and Internal Controls: What Assurances Are There? Investigate the Systems If Weaknesses Are Found

Oberle, Jason, Public Management

What can local governments learn from abuses at Enron, Tyco, WorldCom, and other companies caused by sloppy or nonexistent internal control, an absence of ethical behavior, and improper oversight? Subsequently, the Sarbanes-Oxley Act of 2002 was enacted to prevent further gross abuses in the private sectors.

The enactment of Sarbanes-Oxley led to debate about internal controls and the ability of local and state governments to provide reasonable assurances that public assets, public funds, and public transactions are not likely to undergo significant abuses. The specific connection between this article and Sarbanes-Oaxley is the mandate of having internal controls that ensure prudent and proper financial reporting.

This article shares techniques and insight about what local government managers--myself included--can learn from the private sector.

Focusing on the use of internal controls, this article aims to increase a manager's understanding of these controls. It will report on what managers should know about control systems, and it outlines the process for recognizing potential weaknesses in the control systems and evaluating those weaknesses; it also addresses the manager's responsibility. It concludes by outlining the biggest fallacy associated with implementation of these management controls in local government.

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What Managers Ought to Know

Internal controls, also referred to here as management controls, are the systems and techniques that managers use to ensure an organization or department is accomplishing what is intended. Simply stated, the systems and techniques described here provide reasonable assurances that government departments and the organization as a whole are meeting intended objectives and goals in an ethical, legal, and efficient …

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Publication information: Article title: Managers and Internal Controls: What Assurances Are There? Investigate the Systems If Weaknesses Are Found. Contributors: Oberle, Jason - Author. Magazine title: Public Management. Volume: 94. Issue: 2 Publication date: March 2012. Page number: 12+. © 2009 International City-County Management Association. COPYRIGHT 2012 Gale Group.

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