Elements of internal control system and their role in reaching credit institutions’ goals

Author:University Professor, PhD. Dumitru MATIŞ, Univ. lecturer, PhD Cristina Alexandrina PALFI



Keywords:Internal control system, internal audit, significant risks, duties and responsibilities

Internal control system is a major framework in each credit institution’s activity, which is aimed to ensure that all its goals, such as achieving long term profitability targets and maintaining reliable financial and managerial reporting, have been successfully reached. \r\n\r\nIn this respect there are five different principles for assessment of internal control system that have to be in a continuous interaction: management oversight and the control culture, risk recognition and assessment, control activities and segregation of duties, information and communication, monitoring activities and correcting deficiencies. \r\n\r\nA system of effective internal controls is a critical component of bank management and a foundation for the safe and sound operation of banking organisations. Such a system is essential to ensure that a bank complies with laws and regulations and decreases the risk of unexpected losses or damage to the bank’s reputation. \r\n\r\nMoreover, sound internal control systems are important to the prudent operation of banks and to promoting stability in the financial system as a whole.