<3> Input, process and output: the main stage of operation
<4> Comparator: compares actual system behavior with the plan
<5> Effector: enact control action to change the actual system behavior, take action to reduce failures
1.4 Process of internal control system
<1> Identification of system objectives
<2> Setting target for system objectives
<3> Measuring achievement/output of the system
<4> Compare achievement with target
<5> Identifying what corrective action might be necessary
<6> Implementing corrective action
1.5 Importance of Internal control and risk management in corporate governance
<1> They help companies to achieve planned objectives in a effective and efficient way
<2> They set up reliable internal control system and risk management to reduce significant business, operational, financial and other risks
<3> They are fundamental components of good corporate governance, and ensure compliance with applicable laws and regulations
<4> They safeguard shareholders investment and companies’ assets from inappropriate use
<5> They enhance the quality and reliability of internal and external reporting
1.6 Characteristic of a sound internal control system
<1> Be embedded in the operation of the company and form part of its culture
<2> Be capable of responding quickly to evolving risks within the business
<3> Include procedures for reporting immediately to management significant control failings and weakness together with control action being taken (effective monitoring on a continuous basis)
1.7 Consideration for the element of internal control system
The board must ensure that the system of internal control is effective in managing risks. It should consider:
<1> The nature and extent of the risks facing the company
<2> The extent and categories of risk which it regards as acceptable for the company to bear
<3> The likelihood of the risks concerned material
<4> The company’s ability to reduce the incidence and impact on the business of risks that do material
<5> The costs of operation particular controls relative to the benefit thereby obtained in managing the related risks
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