Question

Name and describe the five elements of internal control. Is any one element more important than another?

Answer 1

Answer :

Internal control ensures the operational effectiveness and efficiency of an organization, reliable financial reporting, and compliance with laws, regulations and policies.

The five elements of internal control are as follows :

1. Control environment - The control environment provides the standards and processes that provide the basis for carrying out internal control across the organization.
2. Risk Assessment - Risk Assessment helps in identifying risks and evaluating the same. This helps in filling the there are gaps between risks and controls.
3. Control procedures - Use of standard and consistent procedures helps in providing directions and scoring data in a testing situation in order to control all but the variables being examined.
4. Monitoring - Monitoring internal controls is essential to ensure controls are operating efficiently.
5. Information and communication - To support the achievement of its objectives, Information is necessary for the entity to carry out internal control responsibilities.