Illustrate how principles within a component roll up into the determination of whether the component is present and functioning.

Illustrate the need to apply judgment in determining whether principles are present and functioning, including the possibility of having a principle present and functioning despite internal control deficiencies.

Illustrate the impact of internal control deficiencies at both the principle and component levels.

Illustrate the customization of relevant points of focus, as appropriate, for the entity.

Illustrate that the existence of a major deficiency results in a determination that a principle is not present and functioning and, therefore, the associated component is not present and functioning. (Although not specifically shown in this scenario, the system of internal control would not be effective.)