(a) Meaning of Internal Control:
The Committee of Sponsoring Organisations of the Treadway Commission (COSO) describes internal control as follows: 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:
i. Effectiveness and efficiency of operations;
ii. Reliability of reporting; and
iii. Compliance with applicable laws and regulations.

(b) Objectives of Internal Control:
An internal control system which encompasses the policies, processes, tasks, behaviours and other aspects of a company when taken together:
i. Facilitates effective and efficient operation by enabling it to respond appropriately to significant business, operational, financial, compliance and other risks to achieving the company’s objectives. These include the safeguarding of assets from inappropriate use or from loss and fraud and ensuring that liabilities are identified and managed;
ii. Helps ensure the quality of internal and external reporting. This requires the maintenance of proper records and processes that generate a flow of timely, relevant and reliable information from within and outside the organisation; and
iii. Assists in ensuring compliance with applicable laws and regulations, and also with internal policies in relation to the conduct of business.

(c) Features of a Good Internal Control System:
The features of a good internal control system include:
i. Records Maintenance: Keeping appropriate records ensures that documentation exists for each business transaction. Records management involves storing and safeguarding tangible or electronic records;
ii. Physical and Intangible Safeguards: Safeguards keep unauthorized personnel from accessing valuable company assets. Safeguards are physical, such as locks on doors, or intangible, such as computer software passwords, and are necessary features of an organisation’s internal control system. Many business owners instinctively protect inventory, cash, and supplies. However, blank cheques, company letterhead and signature stamps are items that require safeguarding but are commonly overlooked;
iii. Segregation of Duties: An effective system separates authorization, accounting, and custodial functions. For instance, one employee opens incoming mail, a second prepares deposit slips for the daily receipts, while a third deposits receipts in the bank. This type of separation of duties prevents the opportunity for any individual employee from misappropriating incoming funds. This control involves assigning different people the responsibilities of authorizing, recording transactions, and maintaining the custody of assets. This reduces the likelihood of an employee being able to carry out and conceal errors or fraud;
iv. Organization: There should be an organizational structure in place that defines and allocates responsibility as well as identifies lines of reporting;
v. Personnel: Recruiting and retaining competent personnel help a business to properly record accounting transactions from year to year by providing consistency. A poorly trained accountant, for example, can make incorrect entries that could be innocent mistakes or could have the appearance of fraud. The functions of each employee are also evaluated to increase efficiency;
vi. Arithmetic and Accounting: Policies to ensure accuracy of transactions and balances and ensuring true and reliable operating data and financial statements are put in place; and
vii. Authorization and Approval: All processes and procedures are to be duly authorized and approved by responsible officials in compliance with company policies and laws of the land.

(d) Responsibilities in Relation to Internal Control:
i. Management: It is the responsibility of management to establish and maintain internal control. Management ensures the effectiveness of the controls in an organization and periodically reviews them.
ii. Board of Directors: The members are charged with governance of the entity and through their oversight functions on the management, ensure that controls are working as intended and report to that extent in the annual financial statements.
iii. External Auditors: It is the responsibility of external auditors to assess and evaluate the effectiveness of the internal controls and plan the audit on the basis of their assessment.