4. Basic Financial Management Principles: Federal Financial Management Requirements

Internal controls

Internal controls are the systems established by a grantee agency's governing body and/or administrative staff that are designed to provide reasonable assurance regarding the achievement of objectives in the following categories:

• Effectiveness and efficiency of operations;
• Control of assets and records of the organization to protect against loss, theft, or misuse;
• Compliance with applicable laws and regulations;
• Appropriate oversight by the agency's governing body;
• Adherence to the agency's policies and procedures; and
• Reliability of financial reporting.

Internal controls help ensure that financial information is reliable, thereby assuring managers and governing bodies that the information is accurate for making programmatic and other decisions.

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