Internal controls are highly correlated with the strength of communications across the organization. Essential communications need to be up, down and across the organization. Additionally, employees should be encouraged to ask questions until they understand something that does not make sense. Where this is the culture, data quality improves when stakeholders are provided more data and information reports.
It’s probably common sense that “Information and Communication” was identified as one of the primary components of generally accepted standards for internal controls that were explained in the Standards for Internal Control in the Federal Government document published by the U.S. Comptroller General. The Standards state that the principle requirements of the “Information and Communications” component are:
- Management should use quality information to achieve the entity’s objectives.
- Management should internally communicate the necessary quality information to achieve the entity’s objectives.
- Management should externally communicate the necessary quality information to achieve the entity’s objectives.
It’s not a surprise that the word “quality” is repeated in each of the principles because data quality issues can significantly impair the effectiveness of overall internal controls because issues in this area will quickly impair the functional roles of nearly all stakeholders, in most instances. It’s probably safe to say that most people that do not understand many internal control concepts will readily understand that effective communication strategies rely upon data quality. These are some of the reasons why management in all organizations should ask “When did our organization last conduct a comprehensive data quality audit?”