Is Segregation of Duties the Primary Component of Internal Controls?
Internal Control can be achieved in both a small department with limited personnel, as well as larger departments with more personnel available to achieve segregation of duties. Internal Control consists of five interrelated components: • Control Environment – This includes factors such as integrity, ethical values and the competence of personnel. Management’s philosophy and operating style also play a factor. The attention and direction of Senior Management or the Board significantly affects the control environment. • Risk Assessment – Every organization or department faces a variety of risks from external and internal sources. Management must be able to identify and manage those risks relevant to achieving the organization’s objectives. Management must also be able to deal with the risks associated with changing economic, industry, regulatory, and operating conditions. Control Activities – Control Activities are the policies and procedures that help ensure management directives are c
