Internal Control in Governmental Units
by FRED M. OLIVER Partner, Salt Lake City Office
Presented before the Eighth Governmental Accounting and Finance Institute, Institute of Public Affairs, University of Texas, in coöperation with Texas Municipal League and Texas Chapter, Municipal Finance Officers' Association, Austins-April 1962
INTERNAL CONTROL in governmental units is a subject that has received wide exposure among finance officers across the years, with principal
emphasis on procedures to safeguard cash and other closely related assets of the municipality, large or small.
In the narrow sense, this is what internal control has come to mean to all of us. In its broader aspects, internal control has a deeper meaning and significance than I believe we attribute to it from day to day. I am firm in my belief that it can and should make a very significant contribution to the cause of better government. Achievement
of this objective, in this year of 1962, is one of the great needs of our times.
While we must give consideration to these conventional aspects of internal control, with your permission I should like to devote major emphasis to those internal procedures that serve to promote operational efficiency and encourage adherence to sound administrative
I hope, therefore, that you will share this approach with me while we lift our eyes above the horizon and take a searching look at the relation of effective internal control to the goal of more efficient government.
The most widely accepted definition of internal control is that promulgated by the Committee on Auditing Procedures of the American
Institute of Certified Public Accountants as the plan of organization
and all of the coordinate methods and measures adopted within an organization to (1) safeguard its assets, (2) check the accuracy and reliability
of its accounting data, (3) promote operational efficiency and (4) encourage adherence to prescribed managerial policies. Although this definition was meant primarily to apply to business organizations, it relates equally well to governmental units.
Before we go further, let us analyze briefly what this definition means to your city or mine. The first two points deal exclusively with financial and accounting control; the second two deal with operations and administrative policies. Thus, these four steps, com-