B1 Flashcards
The treadway commission was established by
Private Sponsoring Organizations
COSO prepared
the Internal Control Integrated Framework to help businesses assess internal controls.
A public corporation, evaluating internal control procedures is done by
internal audit staff who reports to the board of directors which are responsible for the internal controls of company
According the COSO, the proper tone at the top helps a company
promote a willingness to seek assistance, navigate gray areas, create a compliance supporting culture
Conduct that will communicate the “tone at the top” includes
limits on situations that can cause conflict of interest ( what is this) / gifts and descriptions of their commitment to keeping information confidential
Board of Directors is
Fiduciary which is acting on the behalf of or best interest of another
The Board of Directors exercises
oversight responsibility to financial reporting and related internal control
Control Environment represents
A company has established and communicated baseline expectations ( example code of conduct) for performance to all employees
Risk Assessment includes
principles such as specifying objectives of risk and financial reporting, asses changes to leaders, Fraud, Risks analyzed
According to COSO, the first step in evaluating the effectiveness of an internal control system is to
establish a Control Baseline
The compliance program that included both Ethics training and hotline for anonymous reporting is evidence of
development of ethical values and the values are understood: Control Environment
Periodic acknowledgement is
the development of ethical values and that ethical values are understood
Define Control Environment
the baseline set by management expectations for employees.
Monitoring internal controls is to
make sure control effectively manages Risks.
Establishing a control baseline is
the first ongoing monitoring step in evaluating the effectiveness of an internal control.
Internal audit manager requests information of training that IT department received showing a
commitment to retain competent individuals which is part of Control Environment
The financial reporting principle suggests
stronger controls and encourages the company to retain qualified personnel.
The definition of Obtain and use information
obtains relevant, high quality information to support a control
Ongoing monitoring activities are
comparison of information, periodic analysis, follow up customer and vendor complaints. (Monitoring COSO)
Monitoring internal control involves
establishing a foundation, designing and executing procedures, assessing and reporting the results & following up corrective action
Monitoring is
assessing the design and operation of controls in a timely manner & taking corrective actions
The fraud triangle is
incentive to commit fraud from motivation and pressure, opportunity stems from weak internal controls, rationalization is justification of actions by fraud perpetrator.
Prioritizing findings is
included in the assess and report phase of an effective approach to monitoring
Committee on Sponsoring Organizations (COSO) are associated with
Institute of Auditors (IIA), Institute of Management Accountants (IMA), American Institute of Certified Public Accountants (AICPA)