Principle 4 - Demonstrate Commitment to Competence

4. Demonstrate Commitment to Competence

4.01 Management should demonstrate a commitment to recruit, develop, and retain competent individuals.

4.1 Expectations of Competence

4.02 Management establishes expectations of competence for key roles, and other roles at management’s discretion, to help the entity achieve its objectives. Competence is the capability to carry out assigned responsibilities. It requires relevant knowledge, skills, and abilities, which are gained largely from professional experience, training, and certifications. It is demonstrated by the behavior of individuals as they carry out their responsibilities.

4.03 Management considers standards of conduct, assigned responsibility, and delegated authority when establishing expectations. Management establishes expectations of competence for key roles. Management may also establish expectations of competence for all personnel through policies within the entity’s internal control system.

4.04 Personnel need to possess and maintain a level of competence that allows them to accomplish their assigned responsibilities, as well as understand the importance of effective internal control. Holding personnel accountable to established policies by evaluating their competence is integral to attracting, developing, and retaining individuals. Management evaluates competence of personnel across the entity in relation to established policies. Management acts as necessary to address any deviations from the established policies. The oversight body evaluates the competence of management as well as the competence overall of entity personnel.

Recruitment, Development, and Retention of Individuals

4.05 Management recruits, develops, and retains competent personnel to Development, and achieve the entity’s objectives.

Management considers the following:

• Recruit - Conduct procedures to determine whether a particular candidate fits the organizational needs and has the competence for the proposed role.
• Train - Enable individuals to develop competencies appropriate for key roles, reinforce standards of conduct, and tailor training based on the needs of the role.
• Mentor - Provide guidance on the individual’s performance based on standards of conduct and expectations of competence, align the individual’s skills and expertise with the entity’s objectives, and help personnel adapt to an evolving environment.
• Retain - Provide incentives to motivate and reinforce expected levels of performance and desired conduct, including training and credentialing as appropriate.

Succession and Contingency Plans and Preparation

4.06 Management defines succession and contingency plans for key roles to help the entity continue achieving its objectives. Succession plans address the entity’s need to replace competent personnel over the long term, whereas contingency plans address the entity’s need to respond to sudden personnel changes that could compromise the internal control system.

4.07 Management defines succession plans for key roles, chooses succession candidates, and trains succession candidates to assume the key roles. If management relies on a service organization to fulfill the assigned responsibilities of key roles in the entity, management assesses whether the service organization can continue in these key roles, identifies other candidate organizations for the roles, and implements processes to enable knowledge sharing with the succession candidate organization.

4.08 Management defines contingency plans for assigning responsibilities if a key role in the entity is vacated without advance notice. The importance of the key role in the internal control system and the impact to the entity of its vacancy dictates the formality and depth of the contingency plan.

1. Principle 1 - Demonstrate Commitment to Integrity and Ethical Values
2. Principle 2 - Exercise Oversight Responsibility
3. Principle 3 - Establish Structure, Responsibility, and Authority
4. Principle 4 - Demonstrate Commitment to Competence
5. Principle 5 - Enforce Accountability
6. Principle 6 - Define Objectives and Risk Tolerances
7. Principle 7 - Identify, Analyze, and Respond to Risks
8. Principle 8 - Assess Fraud, Improper Payment, and Information
9. Principle 9 - Identify, Analyze, and Respond to Change
10. Principle 10 - Design Control Activities
11. Principle 11 - Design General Control Activities over Information
12. Principle 12 - Implement Control Activities
13. Principle 13 - Use Quality Information
14. Principle 14 - Communicate Internally
15. Principle 15 - Communicate Externally
16. Principle 16 - Perform Monitoring Activities
17. Principle 17 - Evaluate Issues and Remediate Deficiencies