What level of assurance should internal control provide?

Internal controls are designed to provide a level of assurance that the organization's financial reporting is reliable and complies with applicable laws and regulations. The appropriate level of assurance that internal controls should provide is reasonable assurance. This means that while internal controls can significantly reduce the risk of errors or fraud in financial reporting, they cannot guarantee absolute accuracy or complete elimination of risk.

Reasonable assurance acknowledges the inherent limitations of internal controls due to factors like human error, fraud, and changes in external conditions. Thus, it's understood that while internal controls are effective, they may not catch every potential issue. This level of assurance is balanced, supporting the organization's needs for reliability in financial reporting while recognizing that some risk will always remain.

In contrast, high assurance and absolute assurance imply a much greater certainty about the effectiveness of controls, which is not typically achievable in practice. Minimal assurance would indicate a very low level of confidence, which contradicts the purpose of implementing internal controls.