University of Saskatchewan

Financial Services (FS)

Internal Controls

The university is undertaking a formal implementation of the COSO (Committee of Sponsoring Organizations of the Treadway Commission) Integrated Internal Control Framework.  The purpose of the framework is to help management better control the university and to provide our board with an added ability to oversee internal control.  A system of internal control allows management to stay focused on the organization’s pursuit of its operations and financial performance goals, while operating within the confines of relevant laws and minimizing surprises along the way. Internal control enables an organization to deal more effectively with changing economic and competitive environments, leadership, priorities and evolving business models.

To facilitate the implementation of the framework following the COSO framework, there are four fundamental principles to follow.

  1. The COSO framework is the foundation for internal control and is written from in a conceptual manner which allows the framework to be adaptable to changes in the university’s environment.
  2. Internal control is a process and needs to be cost-effective.  It is designed to support the achievement of the university’s objectives. This is important as processes tend to gradually decline into disorder and will need to be constantly monitored and updated to meet new risks.  In addition, internal control as a process, makes it easier to understand the five components of internal control interacting together to help meet objectives.
  3. Internal control applies equally to compliance activities and to operations (not just financial reporting objectives).
  4. While effective internal control requires leadership from the top (Greg Fowler, VP Finance and Resources has made internal control one of his main priorities), the responsibility for effective implementation of internal control resides with everyone in the university, not just the finance function.  At the University of Saskatchewan, finance is leading the implementation of the framework.

One of the basic objectives of the COSO framework is meet reporting objectives.  Reporting objectives pertain to the preparation of reports for use by our own management and stakeholders.  Reporting objectives not only related to financial reporting but also include non-financial reporting.  Reporting can be for internal or external purposes.  For purposes of the leadership project, we are asking your team to focus on External Financial Reporting Objectives.  These objectives meet obligations to and expectations of stakeholders.  Financial statements are necessary for our stakeholders and the following is a list of what can be determined to be our primary stakeholders:

Internal Control Over Financial Reporting

Of great importance to the university is the annual audit of our financial reporting.  The Vice-President of Finance and Resources and the Board of Governors have very high expectations of management to produce accurate and complete financial statements and to achieve a clean audit every year.  In order to achieve this, the university must have a sound system of internal control over financial reporting. 

Using COSO internal control framework, you are challenged to design a project brief to define how to implement a formal internal control over financial reporting process.  This will include creating a list of objectives and risks to achieving those objectives.  Also, a method to demonstrate the principles exist and support the components of the framework.

Key Linkages

Self-Assessment  & Resources

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Quick Fix Suggestions for Internal Control Process Improvements  
Self-Assessment Survey