Internal control system as discussed by ISA consist the following elements on components: –
(1) The control environment:: is the overall attitude, awareness and actions of directors and management regarding the internal control system and its, importance in the entity.
(2) Risk assessment process: this is risk management in the entity which is a component of inherent, control and detection risks i.e.
AR = IR X CR X DR
(3) Information system i.e. financial reporting which entails reporting of timely, accurate and complete information.
(4) Control procedures which are those policies and procedures in addition to the control environment which management has established to achieve the entity‘s specific objectives.
(5) Monitoring of controls: intend to see that I.C.S is operating as intended and whether any modifications are necessary e.g. supervision, evaluation etc.