What are the components of an internal control system?
The Committee of Sponsoring Organizations (COSO) internal control framework identifies five inter-related components: Control Environment: The control environment, sometimes referred to as “tone at the top”, is the foundation for all other components of internal control. The control environment is influenced by management’s philosophy, operating style, integrity, ethical values, and commitment to competence. If this foundation is strong, if the control environment is positive, the overall system of internal control will be more effective. Risk Assessment: Risk assessment is the identification, analysis, and management of risks relevant to the achievement of the department’s goals and objectives. Risks include internal and external events or circumstances that may occur and adversely affect operations. Once risks are identified, management should consider their impact (or significance), the likelihood of their occurrence, and how to manage them. Control Activities: Internal control acti
