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Second Quarter 2006 • Vol. 10 • No. 2

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Evaluating Soft Controls

Need help evaluating soft controls? Answering a few questions can help with your evaluation.

LARRY D. HUBBARD, CIA, CCSA, CPA, CISA
PRINCIPAL, LARRY HUBBARD & ASSOCIATES

Most soft controls can only be self-assessed because they impact attitudes, and attitudes — unlike policies, procedures, and reconciliations — are unique to each person. In The Committee of Sponsoring Organizations of the Treadway Commission's frameworks, soft controls fall under the "internal environment" component and must be evaluated before all the other control components. That way, the impact of soft controls — or the environment — on people can be considered in designing or evaluating other controls.

In evaluating soft controls, managers can tell you the "design" of soft controls, but it is the actual workers who can tell you the "operation" of soft controls. Answering the following questions can help you evaluate your organization's soft controls:

• In what ways does your manager encourage you to increase your ability to perform your job?
• To what extent does your manager do the "right" thing, regardless of any negative consequences or pressures?
• How clearly do your manager's actions demonstrate the company's policies on ethical conduct?
• How effective is your manager in creating a positive environment for following company policies and doing the right thing?
• To what extent is your manager willing to hear other points of view and communicate the reasoning behind his/her decisions?
• How effective is your manager at communicating departmental priorities and objectives and seeking the help of others to overcome barriers to their achievement?
• How clearly are job responsibilities and other duties defined and communicated within your department?
• To what extent do you personally understand and agree with the goals and objectives of your department?
• How well do the systems and procedures you are expected to use support the needs of your job responsibilities?

Larry Hubbard, CIA, CCSA, CPA, CISA, is a professional trainer and consultant with a broad background in accounting, auditing, and finance. His experience includes audit management; information systems, financial, and operational auditing; financial reporting; consulting and training; and organization directorship.