Internal Control

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 three categories.

1. Reliability of financial reporting = The objectives are publishing reliable financial reports (e.g., annual financial statements, interim financial reports) and safeguarding assets from unauthorized use (e.g.,  embezzlement, theft, damage, unauthorized purchase, or unauthorized disposal). Financial reporting controls enable a company to safeguard its assets from unauthorized disposal and prepare financial statements in conformity with GAAP. 
2. Effectiveness and efficiency of operations = In the operations category, some examples of objectives are good business reputation, return on investment, market share, new product introduction, and using assets effectively and efficiently. The operations control objectives cover business strategy and tactic.   
3. Compliance with applicable laws and regulations = The broad objective is compliance with laws and regulations that affect the company.

Internal Control - Must see to it that assets are safeguarded, appropriate accounting data is generated, management policies and procedures are followed, and that productivity and efficiency is achieved throughout the organization.