Safety and Soundness
Internal Controls: Why They Matter
An introduction for new employees
The Federal Home Loan Bank of Des Moines’ mission – to be a reliable provider of funding, liquidity and services for our members so they can meet the housing, business, and economic development needs of the communities they serve – is an important one.
To fulfill our mission, we must maintain a safe and sound Bank. We require a very high level of integrity in our operations and financial reporting. As such, an effective internal control system is of critical importance – and an internal control system is only as good as the people who support it. That’s why you’re joining us! We work with quality employees who take internal controls seriously.
Internal controls impact everyone at the Bank – no one is exempt from following controls. An internal control is a process designed to prevent or reduce risks that can keep us from achieving our objectives. Examples of an internal control include:
- An approval
- A verification
- A reconciliation
- A review
Looking both ways before crossing a street, or covering leftover spaghetti with a paper towel before reheating in the microwave, are both examples of controls we use every day to reduce risks – big or small. To achieve our objectives and our mission, we need to effectively balance risks and controls.
Role of Internal Controls
We create and follow internal controls that
- Are proactive
- Add value
- Are cost-effective
- Mitigate our exposure to risk
An effective internal control has five key elements:
- Its purpose
- Who’s accountable
- How it works
- When it’s expected to be implemented
- Documentation of when and how the control was performed, and by who
Even with strict adherence to policies and procedures, mistakes will be made. We are (after all!) only human. An effective internal control system allows us to learn from our mistakes, correct them quickly, and become stronger in the process. When a mistake happens, it’s essential to immediately notify your supervisor so that the error can be appropriately escalated and addressed.
We track errors that occur at the Bank, and we pay particular attention to significant and/or recurring errors. Such monitoring helps to ensure that errors are promptly addressed and mitigated by making improvements to our processes and procedures.
In addition, Control Owners must certify that their controls are working effectively. The Bank files its financial statements with the Securities Exchange Commission (SEC), certifying that they are true and that all procedures and internal controls have been evaluated (among other reporting).
The Bank provides regular communication and training to keep employees up-to-date on their roles and expectations with regard to controls.
We are excited to welcome you to FHLB Des Moines! You’ll play an important role in ensuring we operate in a safe and sound manner so we can add value for our members and fulfill our mission. Thank you for your commitment to learning and following controls to reduce risk.