Define Internal controls and describe the five components of a good internal control system.

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Internal control can be defined as a procedure established by management to safeguard organizational assets, ensure efficient reporting and reduce the chances of fraud.

Five components of Internal control system

1) Control Environment: This is related to attitude of management and employees with respect to Internal Control and how efficiently they are followed

2) Risk assessment: This is reletead to identifying the critical areas of risk reviewing them and implementing internal controls over them

3) Control Activities: This relates to use of accounting systems and Information technology to ensure that applied controls are followed properly

4) Information and communication: This relates to how the information is processed and how the same is communicated to the user.

5) Monitoring: This relates to how overall functions are working and how updations are carried in case deficiency are noticed.

ekkarill92 answered 1 year ago

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