Components of an internal control system
A. Control environment
Elements:
Government and mgt functions and the attitudes, actions and
awareness of those charged with governance and mgt
concerning the entity’s internal control and its important to
the entity.
 communication and enforcement of integrity and ethical
values
 commitment to competence
 participation of those charged with governance
B. Risk Assessment Process
How the business identifies business risks relevant to the
prep of FS in accordance with the entity’s applicable fin rep
framework
C. Information system
And related business processes
relevant to financial reporting
and communication
D. Control Activities relevant
to audit
Procedures and records designed and established to;
i. initiate,
ii. record,
iii. process and
Policies and procedures which help ensure that mgt directives
are carried out. Control activities whether within information
technology or manual systems, have various objectives and are
applied at various organisational and functional levels
Process to assess the effectiveness of IC performance over
time. It involves assessing the effectiveness of controls on a
timely basis and
taking necessary
remedial actions.
E. Monitoring of Controls
Control sets the tone in the organization, influence
the level of control consciousness of its people
 mgt’s philosophy and operating style
 organizational structure
 assignment of authority
 responsibility
 human resource policies and practices
It estimates their significance, assesses their
likelihood of their occurrence and decides upon
actions to respond to and manage them and the
results thereof
iv.
report entity transactions (and events and
conditions) and
v.
to maintain accountability for the related
assets, liabilities and equity.
This is done through ongoing activities, separate
evaluations or a combination of the two. Ongoing
monitoring activities are often built into the normal
recurring
activities of an
entity and
include regular
mgt and
supervisory
activities.