<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