Part 1 — Internal Controls

A process, effected by an entity's board, management, and personnel, designed to provide reasonable assurance regarding achievement of objectives in operations, reporting, and compliance.

Operations (effectiveness/efficiency), Reporting (reliable internal and external reporting), and Compliance (with applicable laws and regulations).

Because of inherent limitations: human error, management override, collusion among employees, and cost-benefit constraints on control design.

Control environment, risk assessment, control activities, information & communication, and monitoring activities.

17 principles (the 2013 framework codified 17 principles distributed across the five components).

The foundation of internal control — the set of standards, processes, and structures (integrity, ethical values, board oversight, organizational structure, accountability) that set the tone of an organization.