Five Components of Internal Control

Good Afternoon Sir,

I would like to know if my answer is sufficient enough to gain 1 mark each for the question below

Question: Identify and briefly explain the FIVE components of an entity’s internal control (5marks)

Answer:

1) The control environment, which includes the attitudes, awareness and actions of management, provides the foundation for the operation of the system of internal control.

2)The entity’s risk assessment is the process of identifying risk, their significance and how they are addressed.

3)The information systems include procedures to initiate, record, process, report and maintain information needed by management and financial reporting.

4) Control activities are policies and procedures that help manage risk. They include authorization and approval, reconciliations, verifications, physical or logical controls and segregation of duties.

5) Monitoring is a process that evaluates the effectiveness of controls and identified and rectifies control deficiencies.