The internal control review is a critical exercise for business entities, which should be conducted on an annual basis to ensure adequacy and completeness thereof to maximize effectiveness and efficiency in managing the operations and business at minimal risks associated with the business. The internal control review is also a requirement in light of the constant changes in information technology worldwide and legislations governing the environment in which the organization operates.
Furthermore, the internal control review is vitally important for the internal audit function as it enables them to verify the extent of application of internal control systems within the business entity, and the absence of application thereof, take the corrective actions and establish the measures to prevent reoccurrence of the same.
The Committee of Sponsoring Organizations of the Treadway Commission (COSO) broadly defines “Internal Control” as:
Internal control is a process, effected by an entity’s board of directors, management, and other personnel, designed to provide reasonable assurance regarding the achievement of objectives relating to operations, reporting, and compliance.
Part of the philosophy of this definition is that internal control is not and cannot be limited to finance and accounting activities but rather encompasses the entire organization and a combination of different levels of employees, management and the board.
Internal Control Objectives as per the 2013 COSO Framework:
The five components that create effective internal control are as follows:
We have assisted various organizations to establish the Internal Control Framework and designed and tested the Internal Controls for their effectiveness. Hire us to provide flexible solutions on Internal Controls.