5 Components Of Internal Control Essay

1. Give an overview of the 5 components of internal control according to coso integrated frameworkFirst of all ill start by stating the definition of internal control. Internal control is a process, effected by an entity’s board of directors, management and other personnel, designed to provide reasonable assurance regarding the achievement of objectives relating to operations, reporting, and compliance. It consists of the following 5 components- Control environment- this is the set of standards, processes, and structures that provide the basis for carrying out internal control across the organization. The resulting control environment has a pervasive impact on the overall system of internal control-Risk assessment- risk assessment involves dynamic and iterative process for identifying and

Explain the 3 key steps in adopting risk appetite and provide 5 examples of risk appetite statementTo effectively adopt risk appetite, an organization must take three key steps-Management develops, with board review and concurrence, a view of the organizations overall risk appetite-This view of risk appetite is translated into a written or oral form that can be shared across the organization-Management monitors the risk appetite over time, adjusting how it is expressed as business and operational conditions warrant.examples of risk appetite starements are: 1The organization has a higher risk appetite related to strategic objectives and is willing to accept higher losses in the pursuit of higher returns2 The organization has a low risk appetite related to risky ventures and therefore is willing to invest in new business but with low appetite for potential losses3 A health service organization has a low risk appetite related to patient safety but a higher appetite related to response to all patient needs4 A manufacturer of engineered wood products has adopted a higher risk appetite relating to product defects in accepting the cost savings from lower quality raw