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Internal Control

An effective internal control structure consists of policies and procedures established to provide reasonable assurance that specific Chapter objectives will be achieved. These policies and procedures should provide reasonable assurance that Chapter operations will be in compliance with applicable laws and regulations, that the accounting records will fairly reflect the Chapter's financial transactions and prevent errors, omissions, and illegal acts. Any chapter's internal control structure consists of the following five elements:

Control Environment: The control environment is a reflection of the overall attitude of a Chapter's management. Factors include integrity, ethical values, competence, management philosophy and operating style, delegation of authority and responsibilities, organizational structure, etc.

Risk Assessment: Risk Assessment is the identification of drawbacks and circumstances, which can occur that would prevent achieving Chapter objectives. After identifying the drawbacks and circumstances, an analysis is made on how to manage these obstacles.

Control Activities: Control activities are the policies and procedures that Chapter management has established to achieve its objectives. These policies and procedures generally fall into the following six categories:

- Adequate segregation of duties;

- Proper authorization of transactions and activities;

- Adequate documents and records;

- Physical control over assets and records;

- Independent checks on performance;

- Timely preparation of financial statements

Information and Communications: The information and communications system consists of methods and records established to identify, assemble, analyze, classify, record and report Chapter transactions and to maintain accountability for related assets and liabilities. An example is an acceptable accounting system.

Monitoring: Monitoring is a continuous process to oversee the quality of the Chapter's internal control structure and its operating system over time.

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