Page 391 - Onboarding May 2017

Internal Control Plan

Introduction
Every organization, be it governmental, for profit, or not-for-profit, exists to achieve some
purpose or goal. CSCS’s goals are outlined in its Mission Statement that assures Members
receive the benefit of continuously available goods and services at the lowest sustainable
delivered prices, and coordinate with the Brands in their on-going development and innovation
in support and promotion of their Concepts. Internal control is a coordinated set of policies
and procedures for sustaining these goals over the long term.

This document presents the internal control plan for CSCS. The internal control plan
addresses the establishment and implementation of proper controls for business processes
of the Co-op and how mechanisms have been established to safeguard the organization’s
assets and ensure proper use of resources. The format employed for this document follows
the guidelines recommended by Committee of Sponsoring Organizations of the Treadway
Commission (COSO), Internal Control – Integrated Framework, December 2011.

CSCS team members have assessed known risks for business processes, developed controls
to minimize those risks, and developed a plan that will formally monitor the internal control
plan. This plan will be modified and updated based upon any findings in subsequent reviews.

The following sections will discuss each component of CSCS’s internal control plan including:
Control Environment, Risk Assessment, Control Activities, Monitoring, and Information and
Communication.

Internal Control: Overview

The Committee of Sponsoring Organizations of the Treadway Commission (COSO), is
sponsored and funded by five main professional accounting associations and institutes;
American Institute of Certified Public Accountants (AICPA), American Accounting
Association (AAA), Financial Executives International (FEI), The Institute of Internal
Auditors (IIA) and The Institute of Management Accountants (IMA).

The COSO framework defines internal control as a process, affected by an entity’s board of
directors, management and other personnel, designed to provide reasonable assurance
regarding the achievement of objectives in the following categories:

• Effectiveness and efficiency of operations
• Reliability of financial reporting
• Compliance with applicable laws and regulations

COSO has established a common definition of internal controls, standards, and criteria
against which companies and organizations can assess their control systems. According to
COSO, a comprehensive framework of internal control consists of the following five
interrelated components.

1. Control Environment: This is the foundation for all other components of internal control
encompassing such factors as integrity and ethical values, commitment to competence,
boards of directors and audit committee participation, management’s philosophy and

Centralized Supply Chain Services, LLC. Page 5