includes policies, procedures and mindset of top management. A tangible representation can be found in the employee handbook or annual statement. Monitoring process Control activity Control environment Risk assessment

Control environment

Explanation:

Internal controls can be defined as the policies, set of rules, and procedures implemented or put in place by an organization to protect its assets, boost efficiency, enhance financial accountability, enforce adherence to company policies and prevent fraudulent behaviors among the employees.

The main purpose of internal controls is to guarantee that loss is eliminated by ensuring that there is an accurate and reliable accounting system.

An internal control involves the timely use of both internal and external sources of auditing or financial reporting and as such enhance the maintenance of accurate and proper financial records which would also improve their operational efficiency.

Hence, internal controls if properly executed helps to increase operational efficiency, protect and safeguard assets, provides accurate financial information, prevents fraudulent or unlawful behaviors, timeliness of financial records and reporting. Internal control includes the control environment.

Control environment includes policies, procedures and mindset of top management. One good example of the representation of a control environment can be found in the employee handbook or annual statement of the business firm or organization.

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