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Internal Control System (ICS) is a fundamental part of the GRC structure. Properly structured and implemented, the ICS is indispensable for an efficiently functioning company. It gives structure and lays down rules for the flow of information, cooperation, and controlling procedures within the organisation. It helps improve business process efficiency.
But an ICS is not about creating a rigid corporate framework that will harness already existing risk management, internal control, management and monitoring procedures. It rather enables owners, supervisory boards and management to transparently map the responsibilities of the individual management levels and identify missing or ineffective management and monitoring measures, and thus implement necessary improvements. Taking into account the corporate strategy and the risk culture, as well as the legal requirements (Compliance), management assesses the company's risk situation and designs an appropriate risk management system. With the Act to Strengthen Financial Market Integrity, or FISG for short, the German legislator has introduced the ICS requirement also for listed companies. This trend has an effect also on non-listed companies.
In particular, the "Internal Control - Integrated Framework" concept of the Committee of Sponsoring Organizations of the Treadway Commission (COSO), last updated in June 2017 under the title "Enterprise Risk Management – Integrating with Strategy and Performance" (COSO-ERM 2017), is the world's most frequently used concept concerning the systematisation of an internal control system.
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Christian Uhrig
Associate Partner
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