Internal Control Act - New York State Comptroller

1 Internal Control ActIn 1987, the Legislature enacted a law entitled New york State Governmental Accountability, Audit and Internal Control Act of 1987. This act highlighted the need for agency management to promote good Internal controls and accountability in government. The Legislature, recognizing the importance of Internal Control , updated and made the Act permanent effective January 1, 1999 in Chapter 510 of the Laws of 1999. The Internal Control responsibilities of the various branches of government are codified as follows: the State Agencies in Article 45 of the Executive Law, the State Legislature in Article 6 of the Legislative Law, the Judiciary in Article 7 D of the Judiciary Law and the Public Authorities in Article 9 of the Public Authorities Law.

2 The updated laws refined the concepts in the 1987 law to assure that the Act s provisions were consistent with current professional Internal Control standards and the practices of private and public AgenciesCHAPTER 18 OF THE CONSOLIDATED LAWS EXECUTIVE LAW ARTICLE 45 Internal Control RESPONSIBILITIES OF State AGENCIES Section950. Internal Control Internal audit Independent audits of the executive chamber and thedivision of the Independent audits of the department of audit and controland the department of law. 950. Definitions. As used in this article, the following terms shall have the following meanings: 1.

3 " Internal Control ". A process that integrates the activities, plans, attitudes, policies, systems, resources and efforts of the people of an organization working together, and that is designed to provide reasonable assurance that the organization will achieve its objectives and mission. The objectives of an Internal Control system include, but are not limited to: the safeguarding of assets; checking the accuracy and reliability of accounting data and financial reporting; promoting the effectiveness and efficiency of operations; ensuring compliance with applicable laws and regulations; and encouraging adherence to prescribed managerial policies.

4 Internal Control review processes are used periodically to evaluate the ongoing Internal Control system and to assess and monitor the implementation of necessary corrective actions. 2. " Internal audit". An appraisal activity established by the management of an organization for the review of operations as a means of assuring conformance with management policies and the effectiveness of Internal Control , and conducted in conformance with generally accepted standards for Internal auditing. 3. " State agency". Any State department, State university of New york , city university of New york , board, bureau, division, commission, committee, council, office or other governmental entity performing a governmental or proprietary function for the State , or any combination thereof as provided in subdivision two of section nine hundred fifty one of this article, except any public authority or public benefit corporation, the judiciary or the State legislature.

5 4. "Judiciary". The courts and court related programs, including the office of court administration, of the State funded portion of the unified court system and all components thereof as provided in subdivision two of section two hundred forty nine a of the judiciary law. 5. " State legislature". The legislature of the State of New york , including all components thereof as provided in subdivision two of section ninety of the legislative law. 6. "Covered authority". Any public authority or public benefit corporation, other than a bi State authority or public benefit corporation, a majority of whose members are appointed by the governor or serve as members by virtue of holding State offices to which they were appointed by the governor, or any combination thereof.

6 951 Exec. Internal Control responsibilities. 1. The head of each State agency shall: a. Establish and maintain for the agency guidelines for a system ofinternal Control that are in accordance with this article and internalcontrol standards ; b. Establish and maintain for the agency a system of Internal Control anda program of Internal Control review. The program of Internal controlreview shall be designed to identify Internal Control weaknesses, identifyactions that are needed to correct these weaknesses, monitor theimplementation of necessary corrective actions and periodically assess theadequacy of the agency's ongoing Internal Control ; c.

7 Make available to each officer and employee of the agency a clear andconcise statement of the generally applicable management policies andstandards with which the officer or employee of such agency shall beexpected to comply. Such statement shall emphasize the importance ofeffective Internal Control to the agency and the responsibility of eachofficer and employee for effective Internal Control ; d. Designate an Internal Control officer, who shall report to the head ofthe agency, to implement and review the Internal Control responsibilitiesestablished pursuant to this section; e. Implement education and training efforts to ensure that officers andemployees within such agency have achieved adequate awareness andunderstanding of Internal Control standards and, as appropriate, evaluationtechniques; and f.

8 Periodically evaluate the need for an Internal audit function. 2. In order to identify all State agencies and their responsibilities forthe purposes of implementing the provisions of this article, the directorof the division of the budget shall issue and update as necessary aschedule which lists all covered State agencies. 952 Exec. Internal audit responsibilities. 1. The director of the division of the budget, after reviewing theevaluation of the head of each State agency as to the need for an internalaudit function, shall issue and, at the director's discretion, periodicallyrevise a schedule of State agencies (other than the department of audit andcontrol and the department of law) which are required to establish andmaintain an Internal audit function.

9 The Comptroller and the attorneygeneral or their designees shall determine, and periodically review suchdetermination of, whether an Internal audit function within theirrespective departments is required. Establishment of such function shall bebased upon an evaluation of exposure to risk, costs and benefits ofimplementation, and any other factors that are determined to be head of each State agency listed in the budget director's schedule, andthe Comptroller and the attorney general if they or their designees sodetermine, shall establish an Internal audit function which operates inaccordance with generally accepted professional standards for internalauditing.

10 Any such Internal audit function shall be directed by an internalaudit director who shall report directly to the head of such State any other provision of law, each Internal audit directorshall be appointed by the head of the State agency based on appropriateinternal auditing credentials of the proposed appointee, consistent withgenerally accepted standards for Internal auditing, including internalauditing education and experience. The position of Internal audit directorshall be an exempt position and except in the case of the department ofaudit and Control and department of law, such appointment shall be subjectto the approval of the director of the budget.