B1 - Corporate Governance Flashcards
According to COSO, which component of the ERM framework has to do with an entity’s REPORTING DEFICIENCIES?
Monitoring
Page B1-28
The “M” in “CRIME”
According to COSO, which component of the ERM framework has to do with an entity’s timely reporting of identified internal control deficiences
Monitoring
Page B1-28
The “M” in “CRIME”
Sarbanes Oxley Independence Rules
Audit committee members are to be members of the issuer’s Board of Directors but also must be independent.
Board membership does not impair independence, the independent auditor is hired and paid by the company, and therefore is not independent per the rule.
What are the benefits of having a financial expert on the audit committee?
The enhanced level of financial sophistication of the expert can serve as a good resource for the audit committee.
What are the qualifications to be called the “financial expert?”
Qualification as the financial expert is a judgmental issue and the board decides and makes that decision. It is a very “LIBERAL” decision that the audit committee may make.
What does the Sarbanes-Oxley Act of 2002 require that officers of corporations be held accountable for in a code of ethics?
Compliance with laws, rules and regulations. Full, fair, accurate, and timely disclosure in periodic financial statements. Honest and ethical conduct.
Which risk response has to do with the disposal of business units, product lines, or geographical segments?
Avoidance
What technique of risk assessment involves using potential events common to a specific industry as a means of identifying risks or opportunities?
Event Inventory
What is inherent risk (in regards to a company’s risk assessment)?
Inherent risk is the risk to a company in the absence of any actions made by management
What is residual risk (in regards to a company’s risk assessment)?
Residual risk is the risk to a company and that still exists after a company makes a decision to mitigate it.
Control activities are most closely related to what?
Risk responses
