Question

There are five components of internal control:

1) Control environment

2) Risk assessment

3) Control activities

4) Information and communication system

5) Monitoring processes.

In your own words explain the purpose of internal controls. Then select one of the components shown above and explain the role it plays in protecting the assets of the business. Many of these activities can be observed in the workplace both inside and outside of the accounting department. Please share any work experiences you may have had with these activities or any that you have observed in other businesses, even if they are not in the accounting department. Be sure to provide a reference for any material used from a source.

Answer 1

Internal Control Purpose -

It support business by provide an idea to employees and other personnel’s regarding the aspect, objective of business. Due to the internal control the stake holders will be get facilitated that the business transactions are recorded properly and there is no any under reporting or none reporting of transactions. The consumers also preferred those organizations which have proper internal control, as it helps consumers in understanding organisation.

Control Activities

The control activities led down policies and procedures to be followed by personnel’s so that there will not be any misuse of assets of the organization. There should be proper backup as per control over any event of loss of data due to any unfortunate event. The control activities ensure that the applications and network are safeguarded from any threat as part of internal control. Internal control ensure that control activities must have business continuity plan.