1. efficiency and effectiveness of operations (operational objectives);
2. reliability and completeness of financial and management information (information objectives); and
3. compliance with applicable laws and regulations (compliance objectives).

5. Operational objectives for internal control pertain to the effectiveness and efficiency of the bank in using its assets and other resources and protecting the bank from loss. The internal control process seeks to ensure that personnel throughout the organisation are working to achieve its objectives in a straightforward manner, without unintended or excessive cost or placing other interests (such as an employee's, vendor's or customer's interest) before those of the bank.

6. Information objectives address the preparation of timely, reliable reports needed for decision-making within the banking organisation. They also address the need for reliable annual accounts, other financial statements and other financial-related disclosures, including those for regulatory reporting and other external uses. The information received by management, the board of directors, shareholders and supervisors should be of sufficient quality and integrity that recipients can rely on the information in making decisions. The term reliable, as it relates to financial statements, refers to the preparation of statements that are presented fairly and based on comprehensive and well-defined accounting principles and rules.

7. Compliance objectives ensure that all banking business is conducted in compliance with applicable laws and regulations, supervisory requirements, and internal policies and procedures. This objective must be met in order to protect the bank's franchise and reputation.

Footnotes:

2. This paper refers to a management structure composed of a board of directors and senior management. The Committee is aware that there are significant differences in legislative and regulatory frameworks across countries as regards the functions of the board of directors and senior management. In some countries, the board has the main, if not exclusive, function of supervising the executive body (senior management, general management) so as to ensure that the latter fulfils its tasks. For this reason, in some cases, it is known as a supervisory board. This means that the board has no executive functions. In other countries, by contrast, the board has a broader competence in that it lays down the general framework for the management of the bank. Owing to these differences, the notions of the board of directors and senior management are used in this paper not to identify legal constructs but rather to label two decision-making functions within a bank.

3. These include internal controls over safeguarding of assets and other resources against unauthorised acquisition, use or disposition, or loss.