What is the definition of internal control?

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 the achievement of objectives” in three categories:

a)       Effectiveness and efficiency of operations.

b)       Reliability of financial reporting.

c)       Compliance with applicable laws and regulations.