APPENDIX A:
WHO IS RESPONSIBLE FOR IMPLEMENTING INTERNAL CONTROLS?

The Governor
The overall responsibility for internal control in the executive branch rests with the Governor. The Governor establishes the tone for a positive control environment and sets the implementation example for the rest of the State. The Governor adopts the internal control policies for achieving the objectives in his or her own office, as well as for State government as a whole.

The State Comptroller
In Connecticut, consistent with Constitutional and statutory obligations, the State Comptroller establishes the statewide internal control policies for all State agencies and authorities.

Agency Heads
Agency heads (including the constitutional officers) are responsible for adhering to the statewide internal control policies and adapting them to their agencies' objectives. This helps to ensure a positive control environment and convey high ethical standards to agency division managers. Among other responsibilities, the agency head should do the following:

Bureau and Division Heads
Bureau and division heads are responsible for aligning division objectives with agency policy. Division objectives guide the development and implementation of internal control policies and procedures and ensure consistency with overall agency objectives and the strategic plan. In addition, managers provide direction on the following:

Bureau and division heads assign specific responsibility for internal control to program administrators who have a hands-on role in devising and executing internal control policies.

Fiscal Officers

Fiscal officers play a particularly significant role in the implementation of financial internal controls. They track and analyze agency performance from a financial perspective. Fiscal officers are important in preventing and detecting fraudulent reporting. According to the 1992 Treadway Commission, fiscal officers have the following responsibilities:

Staff
Internal control activities are explicit or implicit in the duties of every staff member including the following: In addition, each staff member has the responsibility of communicating to higher levels within the agency, regarding the following matters: Each staff member has the responsibility to resist pressure to participate in improper activities. The internal control system needs to include channels outside normal reporting lines, permitting each staff member to report concerns without fear of reprisal.

The State Legislature
In the public sector, management is accountable to the General Assembly (State Legislature). For example, through the rules review, budgeting, and auditing processes, the Governor, agency heads, and governing boards are accountable to legislators. Because the State Legislature can reserve its authority in regard to key decisions, such as Senate confirmation of appointees, legislators have their own unique role in setting high-level objectives. In this manner, the State Legislature's oversight plays a pervasive role in internal control. In addition, the legislature's appointed Auditors of Public Accounts evaluate the internal control structure as a part of their audits of the various State agencies.

Oversight and Governance
For Executive Branch departments, oversight and governance groups include the Office of the State Comptroller, the Office of Policy and Management, the Department of Administrative Services, the Office of the State Treasurer, and the Legislative Program Review and Investigations Committee. These groups set standards and specify procedures for the operation of State programs.

For higher education organizations, the oversight entity is usually a Board of Trustees and may include an audit committee.

Internal Auditors
Within an agency or division, internal auditors have a direct role in examining the adequacy and effectiveness of internal controls. They also have a responsibility to recommend improvements. Internal auditors have the difficult challenge of remaining objective; they must maintain independence if they are to do their jobs effectively. The standards of Professional Practice established by the Institute of Internal Auditors describe that important role. Internal auditors must be concerned with the following:

The dual nature of an internal auditor's role and the scrupulous maintenance of his or her independence requires that potential conflicts of interest be carefully monitored. At the same time, internal auditors need to recognize their limitation--they do not have primary responsibility for establishing policy or maintaining internal control.

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