An effective internal control structure will keep the right people informed about the organization’s progress (or lack of progress) in achieving its objectives, but it cannot turn a poor manager into a good one. Internal control cannot ensure success, or even survival. It can only provide reasonable assurance, due to limitations inherent in all internal […]
Reportable condition has the same meaning as the term significant deficiency. These two terms are used to define a significant deficiency in the design or operation of internal control that could adversely affect a company’s ability to record, process, summarize, and report financial data consistent with the assertions of management in the company’s financial statements. […]
The internal control system must be monitored by management and others in the organization. This is the framework element that is associated with the internal audit function in the company, as well as other means of monitoring such as general management activities and supervisory activities. It is important that internal control deficiencies be reported upstream, […]
Communication addresses the need in the organization to identify, capture, and communicate information to the right people to enable them to carry out their responsibilities. Information systems within the organization are keys to this element of internal control. Internal information, as well as external events, activities, and conditions must be communicated to enable management to […]
Policies and procedures can help ensure that management directives are carried out. Control activities occur throughout the organization at all levels in all functions. These include activities such as approvals, authorizations, verifications, reconciliations, reviews of operating performance, security of assets, and segregation of duties, etc.
The identification and analysis of relevant risks to achieve the objectives form the basis to determine how risks should be managed. This component should address the risks, both internal and external, that must be assessed. Before conducting a risk assessment, objectives must be set and linked at different levels.
Control environment is the foundation for all other components of internal control, providing discipline and structure. It is sometimes referred to as the “tone at the top” of the organization, meaning the integrity, ethical values, and competence of the entity’s people; management’s philosophy and operating style; the way management assigns authority and responsibility and organizes […]
The COSO Framework consists of five interrelated components as follows: a) Control environment. b) Risk assessment. c) Control activities. d) Information and communication. e) Monitoring. These five components are linked together, thus forming an integrated system that can react dynamically to changing conditions. The internal control system is intertwined with the organization’s operating activities, and […]
In 1992, the Committee of Sponsoring Organizations (“COSO”) of the National Commission on Fraudulent Financial Reporting (also known as the Treadway Commission) published a document called Internal Control – Integrated Framework, which defined internal control as “a process, effected by an entity’s board of directors, management and other personnel, designed to provide reasonable assurance regarding […]
Topic PRC GAAP（New Accounting Standard for Enterprises issued by Ministry of Finance of P.R.C on Feb.15, 2006） IAS/IFRS US GAAP Intangible asset received as a capital contribution from an owner It should specify by the value regulated in investment contract or agreement, except that the value is not fair. Measured at fair value. Cost mode […]