Lately we've been discussing the subject of control objectives as used in the formulation and implementation of internal control systems. This subject is important to most Government contractors because the Government expects contractors to have effective internal control systems to help ensure the propriety of costs charged to contracts. An internal control system that is found to have a material weakness (a technical term that means there is more than a remote chance that something bad will happen as a result of an internal control deficiency) can result in a number of undesirable actions including suspended or disallowed costs, increased Government oversight, or even disqualification of a bid.
Each internal control system has a number of distinct control objectives associated with it. There are (at least) two control objectives that are common to all internal control systems. Yesterday, we discussed one of those; independent reviews. Today we discuss the other; training.
Companies must ensure that its personnel have sufficient training, experience, and guidance to perform tasks in accordance with established procedures. A training program usually consists of (i) initial training such as that given to newly hired employees or existing employees moving to different positions within the company and (ii) periodic training (typically annually) for all employees involved in the process.
Companies will need to develop training plans, prepare training materials, identify trainers and maintain records (or other evidence) of completed training to demonstrate that employees have been trained in accordance with established policies and procedures. Larger companies typically develop in-house capabilities while smaller companies frequently outsource their training needs.