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Internal control, as defined by accounting and auditing, is a process for assuring of an organization's objectives in operational effectiveness and efficiency, reliable financial reporting, and compliance with laws, regulations and policies. A broad concept, internal control involves everything that controls risks to an organization.
COSO notes that in order for an effective system of internal control to reduce the risk of not achieving an entity's objectives, (i) each of the five components of internal control and relevant principles is present and functioning, and (ii) the five components are operating together in an integrated manner.
This standard contains the standards over performing an audit of internal control over financial reporting that is integrated with an audit of financial statements. The auditor must test entity-level controls that are important to the auditor's conclusion about whether the company has effective internal control over financial reporting ...
Internal control procedures and internal auditors: Internal control procedures are policies implemented by an entity's board of directors, audit committee, management, and other personnel to provide reasonable assurance of the entity achieving its objectives related to reliable financial reporting, operating efficiency, and compliance with laws ...
Common criteria are labeled as, Control environment (CC1.x), Information and communication (CC2.x), Risk assessment (CC3.x), Monitoring of controls (CC4.x) and Control activities related to the design and implementation of controls (CC5.x). Common criteria are suitable and complete for evaluation security criteria.
Internal auditing is an independent, objective assurance and consulting activity designed to add value and improve an organization's operations. It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control and governance processes. [1]
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These two concepts together (the account- or disclosure-related risks and control-related risks) are called "Internal Control over Financial Reporting Risk" or "ICFR" risk. A diagram was included in the guidance (shown in this section) to illustrate this concept; it is the only such diagram, which indicates the emphasis placed on it by the SEC.