Question

Which components of the internal asset audit are the most valuable? Why?

*Please answer it precisely and support your answer with references.

Answer 1

For clear and better understanding first of all let’s know main components of internal asset audit or internal control.

Followings are the main components of internal asset audit or internal control;

1. Control environment

2. Risk assessment

3. Control activities

4. Information and communication

5. Monitoring

Although all five components of this internal audit system are very important because ignorance of any component will lead to failure of internal control hence we can not ignore any component.

But if we talk about the most valuable component then definitely it will be control environment because it is the base or backbone of the internal audit & internal control. If a firm does not have a perfect & suitable control environment then all other components will not work properly. So it proves that control environment is the most valuable component of internal asset audit system. As we know that control environment laid down the foundation for internal audit system because it includes whole internal environment such as;

·        Integrity & ethics

·        Commitment & competence

·        Management’s Philosophy & Operating Style

·        A perfect organizational structure

·        Proper division of authority & responsibility

·        Good human resource management for internal audit etc.

So on the basis of above explanation, it is clear that control environment is the most valuable component.