Information Systems Operations & Maintenance

Internal Control
Organizations are required by law to establish and maintain an adequate system of internal
control.

This module will explain what is internal control, as well as the objectives, principles and
models of an internal control system.

Internal Control

Internal control as defined in the COSO Framework 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:

 Efficiency and effectiveness of operations;

 Reliability of financial reporting;
 Compliance with applicable laws and regulations.
 Safeguarding of the assets of the organization.

Components of Internal Control

https://college.neu.edu.ph/pluginfile.php/14808/mod_book/chapter/39075/image.png

Monitorin
React dynamically, changing as conditions warrant.
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This cube depicts the direct relationship among the organization's objectives, the
components of internal control, and the operating units, legal entities, and other structures
within the entity.

Control Environment             The Foundation on which everything rests. 

Risk Assessment Aware of and deal with risks it faces.
Actions identified by management as necessary to address
Control Activities
risks to achievement of objectives.
Control Environment             The Foundation on which everything rests. 
Information & People to capture and exchange the information needed to
Communication conduct, manage and control operations.

Models

Internal controls can be classified into various types and it is the combination of these
controls that go to make up the overall system of internal controls designed to achieve the
general control objectives. 

Such controls can be classified into:

 Preventative Controls - controls put in place to avert a negative event from occurring.

 Detective Controls - controls that are used after the fact of a discretionary event.
 Corrective Controls - controls put in place after the detective internal controls
discover a problem.
 Directive Controls - controls designed to produce positive results and encourage
acceptable behavior.
 Compensating Controls - controls  which can be seen to exist where a weakness in
one control may be compensated by a control elsewhere.