28. Internal Controls

Comment: A respondent suggested that internal controls should be explicitly defined using the Generally Accepted Government Auditing Standards definition, which states that internal controls are "an integral component of an organization's management that provides reasonable assurance that the following objectives are being achieved: Effectiveness and efficiency of operations, reliability of financial reporting, and compliance with applicable laws and regulations."

Response: The rule focuses on "business systems," which includes internal controls and the specific criteria that those systems must meet to be acceptable. The term "internal controls" is commonly defined throughout professional accounting documents and literature and, therefore, does not require an explicit definition in this rule.