In the 2015 Indiana General Assembly, state legislators passed legislation on internal control in local government. Under Indiana Code 5-11-1-27, all political subdivisions in Indiana must maintain a system of internal control to promote accountability and transparency. The legislative body of each unit must adopt internal control standards and provide training to staff. Further, the fiscal officer of each unit must certify, beginning in early 2017, that the standards were adopted and the training provided.
The statute applies to all political subdivisions, including counties, townships, school corporations, libraries, and municipalities.
What is Internal Control?
Internal control is generally defined as a process that provides reasonable assurance that an entity is meeting its objectives in the areas of reliability of financial reporting, effectiveness and efficiency of operations, and compliance with laws and regulations. As defined by the Indiana State Board of Accounts:
- "Internal control is a process executed by officials and employees that is designed to provide reasonable assurance that the objectives of the political subdivision will be achieved;
- It is a basic element fundamental to the organization, rather than a list of added on tasks;
- It is an adaptable process that is a means to an end, not an end in itself;
- It is focused on the achievement of objectives; and
- It is dependent on officials and employees for effective implementation."
(Source: Uniform Internal Control Standards for Indiana Political Subdivisions, SBOA)
Porter County's Compliance
Porter County government has made it a priority to comply with the internal control requirements, with the Porter County Auditor's Office leading the efforts.
The Porter County Commissioners adopted the internal control standards developed by the Indiana State Board of Accounts, along with an internal control document that outlines procedures for departments when implementing their internal controls. View the ordinance: Porter County Internal Control Ordinance (PDF)
In the first half of 2016, Porter County Auditor Vicki Urbanik provided monthly training sessions for Auditor Office staff and then led countywide training later in the year. Each of the county training sessions included a presentation about the basics of internal control and a discussion about audit findings and how internal control can be strengthened to address deficiencies. In addition, each training session included the SBOA's training video on internal controls.
A handout was provided to each trainee that included a general summary by Urbanik about internal control, the SBOA's slide presentation, and the county's adopted ordinance and procedures.
Urbanik's internal control article published in The Journal
Indiana's law on internal control at the local level was the subject of an article authored by Vicki Urbanik, Making Internal Control a Priority in Local Government. The article was published in the fall, 2016 issue of the The Journal of Government Financial Management, the flagship publication of the Association of Government Accountants.
The article addresses the importance of Indiana's law on internal control and discusses the training provided to County Auditor office staff in early 2016. "I am honored to have been given the opportunity to write in a national publication about such an important topic -- Indiana's new law on internal control and our county's efforts to comply," Urbanik said.
For More Information
Here are additional sources of information for internal control.
State Board of Accounts: The SBOA's internal control standards, along with the state training video and other materials, are online at the following link: SBOA Internal Control
United States Government Accountability Office: The GAO's Standards for Internal Control in the Federal Government, also known as the GAO Green Book.