A Internal Control System includes internal corporate rules, procedures and controls designed to limit risks in business processes and support proper and traceable processing. In accounting, this particularly affects Buchführungs, recording and data processing procedures.
What is an Internal Control System (ICS)?
An ICS defines which controls are established within specific processes and how responsibilities, access rights and audits are organised.
The term is not restricted to Bookkeeping. In accounting, however, an ICS is used in particular to support the proper recording and processing of business transactions as well as the traceability of data and modifications.
Which controls belong to an internal control system?
In connection with electronic Buchführungs and recording procedures, the following controls may be relevant, for example:
- Access and entry authorisation controls
- Separations of functions
- Recording and plausibility checks
- Reconciliation and processing controls
- Safeguards against accidental or unauthorised modifications of data and documents
Which controls are required and appropriate depends on the respective processes, the organisational structure and the systems used.
How are ICS and GoBD related?
The GoBD explicitly deal with the internal control system in connection with compliance with the regulatory requirements for Buchführung's and recording procedures.
Afterwards, appropriate controls are to be established, carried out and logged. The specific design depends, among other things, on the complexity of the business activity, the organisational structure and the data processing system used.
ICS and Procedural documentation - what is the difference?
The ICS refers to the intended controls and control mechanisms. The Process documentation on the other hand, describes the procedure used and documents, amongst other things, processes, systems, and organisational conditions.
Both areas are therefore closely related, but fulfil different functions.
Is an internal control system required by law?
Whether and to what extent statutory requirements for an internal control system exist depends on the respective company and legal area.
For tax-relevant Buchführungs and recording procedures, the GoBD requires controls to ensure compliance with regulatory rules. For certain companies, there are also special legal requirements for an internal control system.
There is therefore no design of an ICS that is identical for all companies.
