What are the five key components of internal control in audit?
01.Control Environment:
Sets the tone for the organization, emphasizing the importance of internal control and integrity at all levels.
02.Control Activities:
Encompasses the policies and procedures implemented to address identified risks and ensure effective and efficient operations.
03.Risk Assessment:
Involves identifying and assessing risks that may affect the achievement of organizational objectives, including financial reporting.
04.Information and Communication:
Involves the communication of relevant information and the establishment of channels for internal and external communication.
05.Monitoring Activities:
Includes ongoing assessment and monitoring of internal control to ensure its effectiveness over time.
***These components collectively contribute to the establishment and maintenance of a robust internal control system, providing reasonable assurance regarding the achievement of organizational objective.