The components of Internal Controls are:
- The control environment, which sets the tone for the organization. Integrity, ethics, competency, management philosophy and operating style form the basis of the environment.
- Risk assessment, which involves identifying circumstances which may impede an organization from achieving its business objectives and identifying procedures that can mitigate the risks.
- Control practices that an organization uses to ensure compliance with applicable laws and university policy.
- Reporting and communication, which ensures that quality data and information are transmitted to the right people at the appropriate time to ensure that employees can do their jobs effectively.
- Monitoring activities to assess the quality of performance over time through ongoing assessment or separate evaluations.
In a workplace with effective controls, competent people understand their responsibilities and the limits of their authority, and are informed, mindful and committed to doing what is right. Establishing an ethical environment at all levels — and setting the tone at the top of the organization — is the most important element of the accountability and control environment.
