In an effective internal control system, the following five components work to support the achievement of an entity’s mission, strategies and related business objectives: control environment, risk assessment, control activities, information and communication, and monitoring.
This sample report provides an analysis of a company’s entity-level controls under the COSO framework.
These components work to establish the foundation for sound internal control within the company through directed leadership, shared values and a culture that emphasizes accountability for control. Members of company’s management team at the corporate and terminal levels were asked to complete a comprehensive questionnaire to assist in the evaluation of company's system of internal control within the context of each of the components described above. The questionnaire is designed to identify areas where the company and/or business unit needs to focus control efforts and provides valuable benchmarks against which the company can measure its success in achieving improvements. This evaluation is designed to answer three important questions about each of the above components of effective internal controls:
•Do controls exist?
•If controls exist, how effective are they?
•If controls exist, is there evidence to support their existence and use?