Question

- Provide at least 2 examples for each of the Internal Control components.

Answer 1

Internal control is the process of assuring the operative effectiveness and efficiency,reliable financial reporting and compliance with laws,regulations and policies.

Components of internal controls:

1) Control environment.

Control environment is the attitude towards internal control and control consciousness established and maintained by the managementand employees of the organisation.

2) Communication

Communication is the exchange of useful information between and among people and organisations to support decisions and co ordinate activities.Communication also takes with outside parties such as customers,suppliers and regulators.

3)Risk assesement

Internal controls deal with risk by specifies suitable objectives,Identifies and analyses risk,assesses fraud risk and identifie and analyses significant change.

4) Control Activites

Control activites are toolsboth manual and automated that helps to prevent or reduce the risks that can impede accomplishment of yhe organisations objective and mission.

5) Monitoring

Monitoring is the review of an organisations activites and transactions to assess the quality of performance overtime and to detemine whether controls are effective.