Risk assessment, control environment, control activities, information

Topic 1

There are five components of internal control they are: risk assessment, control environment, control activities, information and communication, and monitoring. All five of these components play a very important part in internal control. Internal control also gives leadership opportunities to CPA’s in management position allowing them “to focus on internal control objectives, process reengineering, and building effective monitoring into their control practices” (Rittenberg, Martens, & Landes, 2007). All of the components of internal control has a great importance, with control environment this ensures that integrity and ethical values are in place, organizational structure of the business, and for Human resources. Risk assessment has a great importance because of fraud risk, financial reporting risks, and financial reporting objectives. If a CPA firm did not include these in their internal control process than there could be a lot of noncompliance issues and there also could be a lot of problems within the company itself.