【正文】 In other words internal control system of controls lay down by the management for the smooth running of the business for the acplishment of its objects. These controls can be divided in two parts . financial control and other controls.Financial controls: Controls for recording accounting transactions properly. Controls for proper safe guarding pany assets like cash stock bank debtor etc Early detection and prevention of errors and frauds. Properly and timely preparation of financial records I e balance sheet and profit and loss account. To maximize profit and minimize cost.Other controls: Other controls include the following:Quality controls.Control over raw materials.Control over finished products.Marketing control, etc2. Definition of internal controls There are many definitions of internal control, as it affects the various constituencies (stakeholders) of an organization in various ways and at different levels of aggregation.One of the definitions of internal controls is as follow: SSRN, USA 2020 A Clear Look at Internal Control: Theory and ConceptsTop 10 Paper, First Quarterly 2020 4Internal Control is a process affected by an entity39。s board of directors, management and other personnel designed to provide reasonable assurance regarding the achievement of objectives in the following categories namely. Effectiveness and Efficiency of Operations Reliability of Financial Reporting Compliance with Applicable Laws and Regulations In AU Section 319 Consideration of Internal Control in a Financial Statement Audit internal control described as: Internal control 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: (a) reliability of financial reporting, (b) effectiveness and efficiency of operations, and (c) pliance with applicable laws and regulations.According AU section 319 internal control consists of five interrelated ponents:a. Control environment sets the tone of an organization, influencing the control consciousness of its people. It is the foundation for all other ponents of internal control, providing discipline and structure.b. Risk assessment is the entity’s identification and analysis of relevant risks to achievement of its objectives, forming a basis for determining how the risks should be managed.c. Control activities are the policies and procedures that help ensure that management directives are carried out.d. Information and munication systems support the identification, capture, and exchange of information in a form and time frame that enable people to carry out their responsibilities.e. Monitoring is a process that assesses the quality of internal control performance over time.Several key points should be made about this definition:1. People at every level of an organization affect internal control. Internal control is, to some degree, everyone39。s responsibility.SSRN, USA 2020 A Clear Look at Internal Control: Theory and ConceptsTop 10 Paper, First Quarterly 2020 52. Effective internal control helps an organization achieve its operations, financial reporting, and pliance objectives. Effective internal control is a builtin part of the management process (., plan, organize, direct, and control). Internal control keeps an organization on course toward its objectives and the achievement of its mission, and minimizes surprises along the way. Internal control promotes effectiveness and efficiency of operations, reduces the risk of asset loss, and helps to ensure pliance with laws and regulations. Internal control also ensures the reliability of financial reporting (., all transactions are recorded and that all recorded transactions are real, properly valued, recorded on a timely basis, properly classified, and correctly summarized and posted).3. Internal control can provide only reasonable assurance not absolute assurance regarding the achievement of an organization39。s objectives. Effective internal control helps an organization achieve its objectives。 it does not ensure success. There are several reasons why internal control cannot provide absolute assurance that objectives will be achieved: cost/benefit realities, collusion among employees, and external events beyond an organization39。s control. Under the COSO Internal ControlIntegrated Framework, a widelyused framework in the United States, internal control is broadly defined as a process, effected by an entity39。s board of directors, management, and other personnel, designed to provide reasonable assurance regarding the achievement of objectives in the following categories: a) Effectiveness and efficiency of operations。 b) Reliability of financial reporting。 and c) Compliance with laws and regulations. COSO defines internal control as having five ponents:1. Control Environmentsets the tone for the organization, influencing the control consciousness of its people. It is the foundation for all other ponents of internal control. 2. Risk Assessmentthe identification and analysis of relevant risks to the achievement of objectives, forming a basis for how the risks should be managed 3. Information and Communicationsystems or processes that support the identification, capture, and exchange of information in a form and time frame that enable people to carry out their responsibilities 4. Control Activitiesthe policies and procedures that help ensure management directives are carried out. SSRN, USA 2020 A Clear Look at Internal Control: Theory and ConceptsTop 10 Paper, First Quarterly 2020