Five Things You Should Never Say (Regarding Internal Control)

Five things you should never say Volume 7, Issue 01 – January 28, 2015 (regarding internal control) Highlights Information and communication is a dissatisfaction with the messenger. Body language, tone and cadence of  If management fundamental component of internal speech, and many other subtle cues, is cynical about control. There are certain things internal control, become especially important here. employees will people sometimes say that are detrimental to good communication Actual or perceived retaliation for take their cues identifying control weaknesses, accordingly. regarding internal control. The concerns, or irregularities is  It is important to following may not literally be what is said, but even a more subtle unacceptable because it discourages avoid actual or employees from coming forward and perceived version of any of these can send the retaliation when wrong message. ultimately could undermine the employees organization’s entire control system. bring up issues. “It’s not your job to bring me “If it’s not broke, don’t fix it”  “Tone at the ideas for changing our top” refers to processes” (Similar to “I A formal evaluation of internal how don’t pay you to think”) controls could stop an audit finding, management communicates Front-line employees are the subject negative news story, or even fraud its attitudes and matter experts and are often before it happens, as opposed to the expectations for reactionary method of waiting for the positioned best to see potential gaps organization. in controls. Also, many key control something to happen before activities are carried out on the front addressing it. Not periodically lines. Employee concerns and reevaluating key processes for risks, suggestions should therefore be control gaps, and effectiveness of taken seriously. Even if a concern is control activities is a recipe for fraud not well founded, shutting them and errors. Good internal control is down could prevent employees from not a one-time exercise, but a bringing forward valid concerns in continuous improvement process. the future. “You should do as I say, not as I “If it’s not good news, I don’t do.” want to hear it.” This statement occurs when standard It is understandable that leaders may procedures must be followed by have a negative reaction to bad employees, but are ignored by news, but they should be careful that management. Related to this is “tone this does not communicate at the top,” a concept that refers to

a o Distributed by Minnesota Management & Budget 658 Cedar Street | Centennial Office Building St. Paul, Minnesota 55155 how “We’ve always done it this way.” Suggested action steps: Managers, management Not only is this not a good reason to think about how to foster good communicates continue a bad or broken process, it communication in your work area. its attitudes and will likely suppress any future Avoid using these common phrases expectations for suggestions for improvements. in your interactions with employees. the organization Changes over time can cause what Employees, it is your responsibility through leading once made sense in a business to report control weaknesses, by example. If function to no longer be a good idea. concerns, and potential irregularities. management is This is also why performing risk Consider using alternate means of cynical about assessments on a regular basis and communication if you feel your internal control, then monitoring the effectiveness of voice is not being heard. employees will the identified control activities is If you have questions, please contact take their cues essential to maintaining a strong Brennan Coatney at accordingly. internal control structure. [email protected] or at (651) 201-8127.

a o Distributed by Minnesota Management & Budget 658 Cedar Street | Centennial Office Building St. Paul, Minnesota 55155