What does 'self-assessment' of controls involve?

Self-assessment of controls primarily involves the assessment of effectiveness by management or staff. This process enables those who are directly involved in operations to evaluate the performance and effectiveness of internal controls within their own departments or processes. Management or designated staff possess detailed knowledge of day-to-day operations, making them well-suited to identify any deficiencies or improvements needed in the internal control system.

This approach fosters a culture of accountability and engagement, encouraging personnel to take ownership of the controls meant to mitigate risks in their specific areas. Further, it allows for a more immediate response to any identified issues, as the staff members themselves are often the ones who can implement changes or improvements swiftly.

The other alternatives suggest assessments that either rely on outside parties or involve a different nature of oversight. External audit reviews and evaluations by third-party consultants lack the direct engagement and detailed insight that internal staff can provide, while testing by internal auditors is more formalized and may not capture the ongoing, real-time effectiveness of controls from the perspective of those involved in the daily operations.