Internal controls are a vital concern for the auditor and the organization that is audited. Internal controls are not a one size fits all proposition. The Committee of Sponsoring Organizations (COSO) has worked to form a foundation of what are the purposes of internal controls and the basic elements of internal controls.

1) Discuss the purpose of internal controls. Discuss the five COSO components of internal controls. Include in your discussion what you consider the most important component and why. 2) explain two to three principles for each component.

3) Explain how auditors evaluate these elements and how the evaluation will affect the audit procedures and the audit of he internal controls over financial reporting.