Financial regulatory authority commonly defines five major components of internal control:
- Distribution of information
- Risk management
For publicly listed groups and companies, the importance of internal control is demonstrated in the regulatory framework by the need for these companies and their chairmen to prepare a report on the internal control procedures related to the preparation and processing of accounting and financial information.
Within small and medium-sized companies, thanks to a less cumbersome legal framework and often a lack of dedicated manpower, the two main components of internal control are:
- Segregation of duties
These two components aim to avoiding errors and reducing the temptation of fraud.