Explanation of Internal Control
‘The process designed and effected by those charged with governance, management and other personnel to provide reasonable assurance about the achievement of the entity’s objectives with regard to reliability of financial reporting, effectiveness and efficiency of operations and compliance with applicable laws and regulations.
Internal control consists of the following components:
(a) The control environment;
(b) The entity’s risk assessment process;
(c) The information system, including the related business processes, relevant to financial reporting, and communication;
(d) Control activities; and
(e) Monitoring of controls.’
Examples of internal controls:
• Division of duties
• Accounting
• Management
• Physical
• Supervision
• Organisation
• Authorisation, and
• Personnel
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