Communication addresses the need in the organization to identify, capture, and communicate information to the right people to enable them to carry out their responsibilities. Information systems within the organization are keys to this element of internal control. Internal information, as well as external events, activities, and conditions must be communicated to enable management to […]
Policies and procedures can help ensure that management directives are carried out. Control activities occur throughout the organization at all levels in all functions. These include activities such as approvals, authorizations, verifications, reconciliations, reviews of operating performance, security of assets, and segregation of duties, etc.
The identification and analysis of relevant risks to achieve the objectives form the basis to determine how risks should be managed. This component should address the risks, both internal and external, that must be assessed. Before conducting a risk assessment, objectives must be set and linked at different levels.
Control environment is the foundation for all other components of internal control, providing discipline and structure. It is sometimes referred to as the “tone at the top” of the organization, meaning the integrity, ethical values, and competence of the entity’s people; management’s philosophy and operating style; the way management assigns authority and responsibility and organizes […]
The COSO Framework consists of five interrelated components as follows: a) Control environment. b) Risk assessment. c) Control activities. d) Information and communication. e) Monitoring. These five components are linked together, thus forming an integrated system that can react dynamically to changing conditions. The internal control system is intertwined with the organization’s operating activities, and […]
In 1992, the Committee of Sponsoring Organizations (“COSO”) of the National Commission on Fraudulent Financial Reporting (also known as the Treadway Commission) published a document called Internal Control – Integrated Framework, which defined internal control as “a process, effected by an entity’s board of directors, management and other personnel, designed to provide reasonable assurance regarding […]
