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Control Environment-Principle 5: Implementing Accountability

The organization regulates the accountability of individuals for their internal control responsibilities in line with the objectives.

Focus Points:

The following focal points highlight essential features of this principle.

Implements Accountability through Structures, Authorities, and Responsibilities

Management and the board of directors establish mechanisms to communicate with individuals, ensure accountability in fulfilling internal control responsibilities throughout the organization, and take corrective actions when necessary to fulfill internal control responsibilities.

The board of directors holds the CEO/General Manager responsible for understanding the organization’s risks and establishing the internal control system necessary to achieve its objectives. The CEO/General Manager and senior management are responsible for designing, implementing, executing, and periodically evaluating the structures, authorities, and responsibilities necessary to establish accountability for internal control at all levels of the organization.

There is a reciprocal relationship between accountability and leadership. Having a solid ethical approach by the organization’s top management contributes to the understanding, execution, and continuous strengthening of internal control responsibilities throughout the organization. An honest approach helps build and implement accountability, moral strength, and a common purpose through:

  • From senior management and the board of directors, expectations regarding issues such as honesty and ethics, conflicts of interest, illegal and other improper actions, and anti-competitive regulations (e.g., codes of conduct are developed and communicated and enforced to all employees and external service providers)
  • The guidance it provides through its philosophy and operating style, as expressed in management’s mood, formalism, determination, and another attitude regarding internal control (e.g., the view of internal control that an organization that has succeeded by taking significant risks may face severe economic or regulatory consequences as a result of venturing into higher risk areas). May vary from one organization to another.)
  • Control and information flow (e.g., communicating how decisions are made, seeking 360-degree feedback on performance, and acting on that feedback)
  • Bottom-up and other communication channels (for example, anonymous or confidential communication channels are provided) so that employees and external service providers can report violations of ethical standards in a way they feel comfortable.
  • Employee commitment to common goals (e.g., aligning individual goals and performance with organizational goals)
  • Management response to deviations from expected standards and behavior (e.g., warnings, terminations, and other corrective measures)

Accountability is motivated by the ethical approach of top management and supported by a commitment to integrity and moral values, competence, organizational structure, processes, and technology. All of these together affect the control culture of the organization.

Sets Performance Criteria, Incentives, and Metrics:

Management and the board of directors establish performance measures, incentives, and other rewards appropriate to responsibilities at all levels of the organization that reflect appropriate dimensions of performance and expected standards of behavior and consider the achievement of both short-term and long-term objectives.

The extent to which individuals are held accountable and rewarded dramatically affects performance because performance measures, incentives, and rewards are adapted to the organization’s objectives and are dynamically modified according to its needs.

Performance measures, incentives, and rewards support an effective internal control system because they are adapted to the organization’s objectives and are dynamically modified according to its needs.

The critical success metrics and considerations to motivate, measure, and reward high performance are shown in the table below.

Success Criteria


Explicit Purposes

All personnel levels are considered to support the organization in achieving its goals. Multiple dimensions of expected behavior and performance from the organization, external service providers, and business partners are considered, and relevant incentives and pressures are determined.

Defined Results

Expectations at every field and every level of the organization regarding its goals and their support for the organization’s goals are communicated, and these expectations are strengthened. Events that the market has rewarded or punished in the past are identified and discussed. The consequences (positive and negative) of not achieving or fully/partially achieving specific goals of the organization. Is transmitted.

Meaningful Metrics

Measures are determined to transform different data into meaningful information about performance. Both positive and negative effects of behavior and deviations compared to expectations are measured. The expected impact on the organization’s objectives is evaluated.

Correction Based on Changes

Performance measures and the amount of associated rewards are regularly readjusted as they evolve over time, based on a systemic and ongoing assessment of the likely impacts of risks.

Evaluates Performance Metrics, Incentives, and Rewards to Maintain Compliance

Management and the Board of Directors harmonize the fulfillment of internal control responsibilities in achieving goals through incentives and rewards.

Management and Board of Directors: Regularly evaluates the performance of individuals and the team against established performance scales, including job performance factors, compliance with standards of conduct, and support and demonstrated competence.

Performance measures are reviewed periodically to maintain the appropriateness and adequacy of incentives and rewards. Internal and external factors, if necessary; It is aligned with the objectives and other expectations of management, staff, and external service providers.

Takes Extreme Pressures into Account

Management and the Board of Directors evaluate and regulate the pressures of achieving objectives when allocating responsibilities, developing performance measures, and evaluating performance.

Management and the board of directors set goals and objectives that create pressure on the organization to achieve goals. Pressures can also result from cyclical changes in specific actions. Organizations: They can influence this pressure by rebalancing workload or increasing resource levels to appropriately reduce the risk of staff “cutting corners” if it could undermine achieving objectives.

The following reasons can most commonly cause excessive pressure.

  • Unrealistic performance goals, especially for short-term results
  • Conflicting goals of different stakeholders
  • Imbalance between rewards for short-term financial performance and tips for stakeholders with a long-term focus, such as corporate sustainability goals
  • Evaluates Performance and Rewards or Applies Disciplinary Action to Individuals –

Management and the Board of Directors evaluate the fulfillment of internal control responsibilities, including compliance with standards of conduct and expected levels of competence, and provide rewards as appropriate. Or take disciplinary action.

Since performance objectives are gradually transferred from the board of directors to the general manager/CEO, senior management, and other personnel, performance evaluation is carried out at all these levels. The board of directors evaluates the performance of the general manager/CEO, and the general manager evaluates the performance of the senior management team. 

At each level, compliance with standards of conduct and expected levels of competence are evaluated, rewards are given, or disciplinary measures are taken as appropriate. Rewards can be in the form of money, equity shares, recognition, or career advancement. The results of these evaluations are announced, and, depending on the situation, rewards are given, or sanctions are applied to achieve the desired behavior.

Fees and other rewards are based on performance evaluation, competencies, skill acquisition, and current market wage information. 

Aim: retaining high-performing employees and encouraging low-performing employees to leave the organization. Human resources manages obtaining, processing, and communicating relevant information to appropriate management and other personnel levels.

References for Internal Control Articles

  • International Internal Auditing Standards, International Institute of Internal Auditors
  • Dr. Davut Pehlivanlı, Current Internal Audit Practices, Beta 2010
  • Prof. Dr. Nejat Bozkurt, Accounting Audit, Alfa 1998
  • Prof.Dr.Nejat Bozkurt, TÜRMOB Independent Audit Training Lecture Notes, 2012
  • Dr.Özgür Çatıkkaş, KGK, Marmara University. Corporate Governance Lecture Notes, 2013
  • İSMMMO-Practical Information for Internal Audit in SMEs, 2013
  • Turkish Internal Audit Institute,
  • Alp Buluch, Article, Internal Control, Hurses, 19 March 2013
  • Turkish Commercial Code No. 6102
  • International Internal Auditing Standards,
  • Treadway Commission Supporting Institutions Committee, Internal Control-Integrated Framework, 2013
  • Public Financial Management and Control Law
  • Public Internal Control Standards
  • Public Internal Control Guide

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