At a time when state and local governments are being asked to do more with less, management may consider the task of assessing and upgrading internal controls to comply with federal guidelines as an administrative headache.
But as we noted in a recent thought leadership piece, Internal controls: Leading Practices for State and Local Government Organizations, using the Green Book as a framework for internal controls has become a leading practice. Indeed, an assessment and monitoring of your controls can be a valuable opportunity to identify:
Organizations that have adopted the Green Book, and those considering making the commitment to the leading practice, encounter some of the same questions to implementation, such as how to go about the process. Participants in our recent Webcast on Green Book implementation had a number of questions on that subject, and following, we provide some answers.
Yes. The effectiveness of an internal control system depends on the effective implementation of each of the 17 principles that make up the Green Book’s 5 components of internal control—Control Environment (Principles 1–5), Risk Assessment (6–9), Control Activities (10–12), Information and Communication (13–15), and Monitoring (16–17).
In short, the 17 principles work together to create an effective control system.A lack of one of the principles can significantly affect the system as a whole. Example scenarios and potential impacts are outlined below.
As a result of the new Uniform Guidance, many state and local governments are now assessing their controls — both as a better practice for managing risk as well as an opportunity to rethink how they run their operations. They are using the Green Book framework to help them identify new opportunities and to evolve their organizations. KPMG has helped many organizations find value when performing a controls evaluation.
Find out more by downloading the PDF below.