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Components of Internal Control

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The internal control framework developed by COSO includes five so-called 'components' of internal control. What are these components? What do they mean to auditors?

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Solution Summary

This solution provides a definition of what is internal control; in addition, it provides information about the five components of internal control and what they really mean to auditors. References are also provided in the solution.

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Before you proceed to answer this question, the first thing that you may want to do is note the definition of internal control. The internal controls of a firm are a system consisting of specific policies and procedures designed to provide management with reasonable assurance that the goals and objectives it believes important to the entity will be met. Also, according to the COSO it may defined as "a process effected by an entity's board of directors, management and other personnel, designed to provide reasonable assurance regarding the achievement of objectives in the following categories - effectiveness and efficiency of operations, reliability of financial reporting, and compliance with applicable laws and regulations."

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