The internal control consists of the necessary processes to detect risks that are potentially harmful to an organization and to avoid them by adhering to a compelling framework. Embedding the internal control in an organization is fundamental for compliance with internationally applicable regulations (e.g. COSO framework) or national procedures (e.g. MaRisk in Germany).
Audits and control measures of the internal revision aim at a continual improvement of business processes, making them more transparent as well as defining preventing actions against malicious acts. With the internal control as a basis, the internal revision organizes its workflows in accordance with the relevant guidelines (e.g. MaRisk in Germany) and organizational requirements. This way, the internal revision gains an overview of critical business areas as well as infrastructures and can consistently pass through the compliant and targeted controls.
As part of the implementation, relevant challenges should be considered at an early stage in order to ensure success:
- Finding the right balance between globally binding rules
- Achieving a comparable level of control through process improvements for smaller legal entities with too many and too complex requirements.
- Assigning and allocating sufficient resources across the organization.
- Respecting the segregation of duties in smaller organizations where only one employee is responsible for completing multiple tasks in a critical process.
- Meeting managements' expectations while keeping the involvement of the 1st line at a reasonable level.
- Ensuring that their framework is consistently applied in all affiliated entities regardless of their size and unique culture.
- Developing the maturity level of internal controls without losing the 1st line or management.
- Establishing ICS as a business enabler rather than a necessary burden.