Coso Presentation
COSO REPORT SUMMARY
CHAPTER 1: DEFINITION
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 in the following categories: - Effectiveness and efficiency of operations - Reliability or financial reporting - Compliance with applicable laws and regulations.
Internal control is: - A process; Internal control is not one event or circumstance, but a series of actions that permeate an entity’s activities. These actions are pervasive, and are inherent in the way management runs the business. Business processes are managed through the basic management processes of planning, executing and monitoring. They should be “built in” rather than “built on”. “Building in” controls can directly affect an entity’s ability to reach its goals, and supports businesses’ quality initiatives. - People; Internal control is effected by a board of directors, management and other personnel in an entity. Internal control affects people’s actions. These realities affect, and are affected by, internal control. - Reasonable assurance; Internal control, not matter how well designed and operated, can provide only reasonable assurance to management and the board of directors regarding achievement of an entity’s objectives. The likelihood of achievement is affected by limitations inherent in all internal control systems, such as human judgment. - Objectives; Every entity sets out on a mission, establishing objectives it wants to achieve and strategies for achieving them. Objectives fall into three categories: - Operations – relating to effective and efficient use of the entity’s resources - Financial reporting – relating to preparation of reliable published financial statements - Compliance – relating to the entity’s compliance with applicable laws and regulations
Components
Internal control consists of
CHAPTER 1: DEFINITION
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 in the following categories: - Effectiveness and efficiency of operations - Reliability or financial reporting - Compliance with applicable laws and regulations.
Internal control is: - A process; Internal control is not one event or circumstance, but a series of actions that permeate an entity’s activities. These actions are pervasive, and are inherent in the way management runs the business. Business processes are managed through the basic management processes of planning, executing and monitoring. They should be “built in” rather than “built on”. “Building in” controls can directly affect an entity’s ability to reach its goals, and supports businesses’ quality initiatives. - People; Internal control is effected by a board of directors, management and other personnel in an entity. Internal control affects people’s actions. These realities affect, and are affected by, internal control. - Reasonable assurance; Internal control, not matter how well designed and operated, can provide only reasonable assurance to management and the board of directors regarding achievement of an entity’s objectives. The likelihood of achievement is affected by limitations inherent in all internal control systems, such as human judgment. - Objectives; Every entity sets out on a mission, establishing objectives it wants to achieve and strategies for achieving them. Objectives fall into three categories: - Operations – relating to effective and efficient use of the entity’s resources - Financial reporting – relating to preparation of reliable published financial statements - Compliance – relating to the entity’s compliance with applicable laws and regulations
Components
Internal control consists of