Purchase Solution

Major components of an internal control system

Not what you're looking for?

Ask Custom Question

What are some major components of an internal control system? Are these components always necessary?

Purchase this Solution

Solution Preview

There are five components that are generally considered main parts of the internal control system:

(1) The control environment
(2) Assessment of risks
(3) Systems of Information & Communication
(4) Control activities
(5) Monitoring

(1) The control environment basically sets the tone for the control environment. The actions and behaviors of management make up a big part of the control environment. What attitudes does management display with employees towards internal control? Are the internal controls very lax? Strong leadership and enforcement of proper internal control policies and procedures directly define the internal control environment. Each of these components is definitely necessary. If the components are not enforced, or are non-existent, employees will see this as their main advantage to commit activities that they shouldn't, and it also sets the tone for the company that regardless of what happens, it won't be properly enforced.

(2) The second major component of internal control requires that management properly assess the company's greatest risks. After a thorough risk assessment is completed, management can begin taking appropriate actions to mitigate as much risk as possible. By decreasing the amount of risk, it ...

Purchase this Solution

Free BrainMass Quizzes
Learning Lean

This quiz will help you understand the basic concepts of Lean.

Organizational Behavior (OB)

The organizational behavior (OB) quiz will help you better understand organizational behavior through the lens of managers including workforce diversity.

Organizational Leadership Quiz

This quiz prepares a person to do well when it comes to studying organizational leadership in their studies.

MS Word 2010-Tricky Features

These questions are based on features of the previous word versions that were easy to figure out, but now seem more hidden to me.

Change and Resistance within Organizations

This quiz intended to help students understand change and resistance in organizations