The internal control environment makes the organization aware of the control process and provides a structure in which it is supposed to be carried out (Biegelman para.12). This component serves as the basis for the rest of the internal control components. The major elements of this component include corporate ethics, moral values, style of management, delegation of authority within the organization and most importantly, people management (Committee of Sponsoring Organizations). This relates to TPC in the way that the company needs to create an internal control environment through effective people management and keeping the whole organization aware about the internal control structure. Risk assessment is the component which enables the management to assess and analyze the risk associated with accomplishment of objectives (Biegelman para.12). As in TPC, the elements of risk assessment includes an analysis of all three divisions and realizing the sources which could probably lead to control failure. For this purpose, TPC must set an internal control objective and then figure out the causes which would lead to deviations from the objective.
The third component includes control activities or polic...
The major elements of this component are verification, performance reviews and separation of responsibilities etc. At TPC, this component involves implementing strategies and policies at headquarter as well as the three separate divisions. These policies might include a thorough system of performance measurement as well as control procedures (Committee of Sponsoring Organizations). The fourth component of internal control refers to management information and communication which entails communicating with employees on the internal control objectives as well as procedures and to instigate their efforts in meeting the goals (Biegelman para.12). TPC needs to enhance communication and information system among all the three divisions so as to ensure that the objective is communicated all over the organization.
The fifth and last component of internal control refers to monitoring which involves overseeing the whole internal control process and procedure to know if the process is carried out as planned and proceeding towards the desired objectives. The TPC's management as well as independent auditors could keep check over the proceeding of control procedure in the organization and achievement of internal control objectives (Biegelman para.12).
Biegelman, Martin T. Designing a Robust Fraud Prevention Program (2004). Association of Certified Fraud Examiners ACFE. Retrieved January 29, 2007 from the World Wide Web: http://www.acfe.com/fraud/view.aspArticleID=239
Committee of Sponsoring Organizations of the Treadway Commission. Wikipedia. Retrieved January 29, 2007 from the World Wide Web: http://en.wikipedia.org/wiki/Committee_of_Sponsoring_Organizations_of_the_Treadway_Commission