Internal Control System of the companies and the financial statements reliability

Author:Univ. prof., PhD Elena DOBRE

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Keywords:effectiveness, efficiency, reliability, compliance, risk assessment

Abstract:
A landmark report on internal control was issued in The United States by the Committee of Sponsoring Organizations of the Treadway Commission. Internal control-Integrated Framework, which is often referred to as „COSO”, is a real control model which provides a sound basis for establishing internal control systems and determining their effectiveness. \r\n\r\nThe three primary objectives of an internal control system are to ensure efficient and effective operations, accurate financing reporting and compliance with laws and regulations. The five essential components of an effective internal control system are: the control environment, risk assessment, control activities, information and communication, and monitoring. \r\n\r\nReengineering an internal control process requires that each COSO component be covered in all audits. Internal control inside an organization is 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 the following categories: Effectiveness and efficiency of operations; Reliability of financial reporting; Compliance with applicable laws and regulations.\r\n

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