Page 245 - F1 - AB Integrated Workbook STUDENT 2018-19
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Audit and financial control
The components of internal control
3.1 The components of internal control
COMPONENTS OF AN
INTERNAL CONTROL
SYSTEM
Control Information
environment system Monitoring
Risk assessment Control
process activities
The control environment is the overall attitude of management
regarding internal controls and their importance. It encompasses
management’s philosophy e.g. a commitment to integrity and ethical
values, a formal organisation structure and proper training of staff.
The risk assessment process is an entity’s process for identifying
and responding to business risk.
The information system relevant to financial reporting objectives
consists of the procedures and records established to process the
transactions that the entity carries out, and to maintain accountability
for the related assets, liabilities and equity balances.
Control activities are manual or computerised procedures that help an
organisation to achieve its objectives and mitigate the business risks it
faces.
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