When we talk about internal control in the context of the US CPA exams, we refer to the web of policies, procedures, and practices that a company deploys to ensure the accuracy of its financial reporting, safeguarding its assets, and maintaining compliance with legal guidelines. Essentially, internal control is the immune system of a business. It's not just a term; it's a subject, with a dedicated section in the CPA exams. Auditors assess a company’s internal control system to determine how much reliance they can place on it, subsequently tailoring their audit approach based on this evaluation.

Three core objectives of internal controls are:

1. Reliability of Financial Reporting: Ensuring that the financials are free from material Misstatement.

2. Effectiveness and Efficiency of Operations: Optimizing the use of resources.

3. Compliance with Laws and Regulations: Making sure the company adheres to applicable laws.

Example: Consider a retail business that has several cash registers. One element of internal control could be a dual custody arrangement, where every cash count at the end of the day is verified by two employees rather than one.

This control reduces the risk of theft or fraud. If you, as an auditor, find this control effective, you may decide to perform fewer substantive tests on the cash account, thus saving time and resources.