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Management is the glue that binds all the goals, objectives, strategies, policies, procedures, workflows and processes, that help ensure that programs, activities and services go according to plan.  An effective management system is the glue across the five components and 17 principles for internal controls excerpted below from the Comptroller General of the United States’ publication Standards for Internal Control in the Federal Government (the Green Book).  The five components and 17 principles for internal controls are as follows.  

Control Environment

1. The oversight body and management should demonstrate a commitment to integrity and ethical values.
2. The oversight body should oversee the entity’s internal control system.
3. Management should establish an organizational structure, assign responsibility, and delegate authority to achieve the entity’s objectives.
4. Management should demonstrate a commitment to recruit, develop, and retain competent individuals.
5. Management should evaluate performance and hold individuals accountable for their internal control responsibilities.

Risk Assessment

6. Management should define objectives clearly to enable the identification of risks and define risk tolerances.
7. Management should identify, analyze, and respond to risks related to achieving the defined objectives.
8. Management should consider the potential for fraud when identifying, analyzing, and responding to risks.
9. Management should identify, analyze, and respond to significant changes that could impact the internal control system.

Control Activities

10. Management should design control activities to achieve objectives and respond to risks.
11. Management should design the entity’s information system and related control activities to achieve objectives and respond to risks.
12. Management should implement control activities through policies.

Information and Communication

13. Management should use quality information to achieve the entity’s objectives.
14. Management should internally communicate the necessary quality information to achieve the entity’s objectives.
15. Management should externally communicate the necessary quality information to achieve the entity’s objectives.

Monitoring

16. Management should establish and operate monitoring activities to monitor the internal control system and evaluate the results.
17. Management should remediate identified internal control deficiencies on a timely basis.

Effective internal control starts with everyone sitting around the table in superintendent’s executive management team or the superintendent’s cabinet. Managers sitting around the table should be able to point to documentation, data and data analytics that explain the scope and depth of internal controls related to their primary roles and responsibilities in the school district. Minimum documentation requirements explained in the Green Book are as follows:

• “If management determines that a principle is not relevant, management supports that determination with documentation that includes the rationale of how, in the absence of that principle, the associated component could be designed, implemented, and operated effectively. (paragraph OV2.06)
• Management develops and maintains documentation of its internal control system. (paragraph 3.09)
• Management documents in policies the internal control responsibilities of the organization. (paragraph 12.02)
• Management evaluates and documents the results of ongoing monitoring and separate evaluations to identify internal control issues. (paragraph 16.09)
• Management evaluates and documents internal control issues and determines appropriate corrective actions for internal control deficiencies on a timely basis. (paragraph 17.05)
• Management completes and documents corrective actions to remediate internal control deficiencies on a timely basis. (paragraph 17.06)”

The standards in the Green Book represent a safe harbor in that the Comptroller General stated, “The Green Book may also be adopted by state and local entities, as well as not-for-profit organizations, as a framework for an internal control system.” The Comptroller General’s updated standards for internal controls were effective beginning with fiscal year 2016. It is highly recommended that a school district’s internal audit department and/or Federal program managers conduct a gap analysis for each federal program in order to understand the extent to which the district's documentation of internal controls align with the 17 principles. 

To access the United States Government Accountability Office publication Standards for Internal Control in the Federal Government (the Green Book) by the Comptroller General of the United States (September 2014), click on the link below.

http://www.gao.gov/assets/670/665712.pdf

One of the tests of leadership is the ability to recognize a problem before it becomes an emergency. Arnold Henry Glasow (1905 - 1998)