Internal Controls

Internal controls are the policies, processes and procedures an organisation uses to manage risk, protect assets, ensure accurate reporting and support compliance with laws, regulations and internal standards. In a financial institution, internal controls help ensure that risks are identified, assessed, managed and monitored effectively. They may include approvals, reconciliations, segregation of duties, system access controls, reporting checks and escalation processes. Internal controls are closely linked to the Three Lines of Defence Model. The first line of defence owns and operates controls, the second line provides oversight and challenge, and the third line, usually internal audit, independently tests whether controls are designed and operating effectively.