Good Governance – Control Framework


How does an organisation maintain control?

When looking from the outside in at your organisation, how can you be sure you have all the right policies, procedures and plans in place to assure the board or a funding body that all is well? It is hard to be objective when you are immersed in the business. Maybe an independent eye every now and again could be of assistance and give that assurance to the board that there is a well governed control framework in place. Last week, I mentioned that board effectiveness can be self assessed and likewise your control framework could also be self assessed in honest, open and frank discussions. Challenging and reviewing this area on a regular basis will only improve performance.

What is control?

According to the Chartered institute of Internal Auditors (Sept 2020) control is:

 “Any action taken by management, the board and other parties to manage risk and increase the likelihood that established objectives and goals will be achieved.”

How can we frame the controls in our business?

There are three headings to group our thoughts, called the hard controls, soft controls and internal control system.

Hard controls

Hard controls are things like: policies, rules, procedures, roles and responsibilities, levels of authorisation and approval. Hard controls can be measured and seen more easily than soft controls. We can plan, assign tasks, have structured processes regarding who does what, we can observe results and hold people accountable for their actions or inactions.

Soft Controls

Soft controls are based around competence, trust, openness, leadership, ethical standards and also reflect attitudes and behaviours. Soft controls are a lot harder to assess and evidence as part of a process to show control. The bottom line is that these controls only work if we trust the people within our organisation to implement the systems in place. Issues arise when the processes are implemented by employees or volunteers whose behaviour may not be where they should be ethically or morally. We don’t have to go back too far to identify leaders in certain national governing bodies for sport whose behaviours demonstrated below par ethical and moral standards.

Internal control system

The internal control system consists of two areas: the control environment and control procedures.

The control environment can cover a range of areas including: culture and values, leadership style and the overall attitude of staff towards the internal controls that are in place. Do the Board/management/staff/volunteers realise the importance of these procedures to ensure that there is good control over the business. The board and management set the tone of the organisation within the control environment. This reflects the way things are done which should be for the right reasons and in the right way.

I would ask the question: do all your staff understand why they are being asked to follow procedures and systems? Sometimes this is a good place to start and take the time to educate and familiarise all staff as part of their continuous professional development. This way we can build trust and understanding from the top (board) through to all members of staff. Governance is not just something for the board and management.

The control procedures are the systems we put in place in addition to the control environment. These procedures can help to identify and correct any failures in the system, identify mistakes early and help us to make better decisions.

Throughout the organisation we need to have a variety of controls in place but they are only as good as the people who operate them. Do we trust the people in our organisation to follow the systems and procedures? Can we trust the system and the people all of the time? I would hope so. We can’t have one without the other so the best thing to do is continually monitor and regularly review the organisation and have open and frank discussions throughout the organisation about the need for controls, procedures and systems in the context of how this helps achieve the goals of the business.

Have a great weekend, hopefully some more ideas to think about. If you need to chat please feel free to drop me a line.

David McNally, Fingal Community and Recreation Services

Fingal Community and Recreation Services CLG is a subsidiary company of Fingal County Council. They oversee the management of 7 facilities on behalf of the Council under a management licence.