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Communicates Within the Organization: Principle 14

The organization communicates internally the information necessary to support the performance of internal control, including internal control objectives and responsibilities.

Focus Points:

The following focal points highlight essential features of this principle:

  • Communicates Internal Control Information – A process is implemented to communicate the necessary information to ensure that all personnel understand and implement their responsibilities regarding internal control.
  • The transmission of information across the organization includes the following.
  • Policies and procedures that support staff in fulfilling their responsibilities regarding internal control
  • Determined purposes
  • The importance, relevance, and benefits of effective internal control
  • Duties and responsibilities of management and other personnel in carrying out controls
  • The organization’s expectations for communicating any matter of significance regarding internal control, including weaknesses, deterioration, and non-compliance in internal control, up and down the organization and throughout the organization

Management selects, develops, and disseminates controls that enable information to be shared through internal communications and enable management and other personnel to fulfill their control responsibilities across various functions, operating units, or departments. 

For example:

A field service personnel in an organization’s sales department collects defect rate information on certain parts. 

This information is also helpful for production and engineering directors, as it may indicate a problem with manufacturing quality or the product’s design. In addition, the results of monitoring actions are communicated to other personnel to ensure that the root cause of the problem is identified and corrective action is taken.

  • Communicates with the Board of Directors – Management and the Board of Directors communicate with each other to have the information necessary to fulfill their respective duties and responsibilities regarding the organization’s objectives.

Communication between management and the board provides the information necessary to fulfill its oversight responsibility for internal control. Information communicated to the board of directors about internal control generally covers essential issues regarding compliance with the internal control system, changes in the internal control system, or problems arising from the internal control system.

Direct communication from other staff to the board is also essential. Board members should have direct access to employees without interference from management. This allows board members to freely ask questions and make assessments of staff about crucial issues that staff might not otherwise feel comfortable sharing, such as compliance with a code of conduct, staff competency, or management’s potential to violate internal controls.

  • Separate Communication Lines – Separate communication channels, such as emergency hotlines, are available when normal communication channels do not work or are ineffective. These communication channels serve as fail-safe mechanisms that enable anonymous or confidential communication.

In some cases, when normal communication channels do not work or are ineffective, separate communication lines are necessary to create confidential or anonymous (anonymous) fail-safe communication mechanisms. Most organizations provide staff with a communication channel to convey such messages to the board of directors or a board representative, such as an audit committee member, and make staff aware of the existence of such a communication channel.

Such separate mechanisms, which encourage an organization’s employees to report suspected code of conduct violations without fear of reprisal, send a clear message that senior management is committed to open communication channels and will act on the information reported.

  • Select the Appropriate Communication Method – The communication method considers the timing, audience, and type of information conveyed.

It is essential that information is both understandable and delivered effectively to ensure that messages are received as intended. Active forms of communication, such as face-to-face meetings, are often more effective than passive forms of communication, such as broadcast email or intranet messaging. Periodic evaluation of communication effectiveness helps ensure that communication methods are working. 

Communicating information about internal control responsibilities alone may not be sufficient. With this notification, management can strengthen the messages conveyed by taking timely and consistent measures.

Resources for Internal Control Article 

  • 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,
  • www.coso.orgTreadway Commission Supporting Institutions Committee, Internal Control-Integrated Framework, 2013

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