B1 - M1: IC Frameworks Flashcards
1
Q
What is COSO?
A
- Committee of Sponsoring Organizations of the Treadway Commission
- Best practices framework for internal control
- used by management and BoD to assist businesses assess IC
2
Q
Objectives of Internal Control? How many are there? What are they? What’s the mnemonic?
A
3 Objectives - ORC
- Operating: efficiently & effectively
- Reporting: reporting accuracy - “Main Focus”
- Compliance: complying with laws and regulations
3
Q
Components of Internal Control. How many are there? What are they? What’s the mnemonic?
A
5 Components - CRIME
- Control Environment: Tone at the top - ethics
- Risk Assessment: FS misstated, not efficient, breaking the law
- Information and Communication: - “FACT only” - Fair Accurate Complete Timely
- Monitoring Activities: Effectiveness of controls and report deficiencies
- Existing Control Activities: Policies/Procedures to mitigate risks
4
Q
Principles of Control Environment
A
“EBOCA”
- Ethics
- Board independence
- Organizational structure
- Commitment to competence
- Accountability
5
Q
Principles of Risk Assessment
A
“SAFR”
- Specify objectives
- identify and Assess changes
- consider potential for Fraud
- identify and analyze Risks
6
Q
Principles of Information and Communication
A
“OIE”
- Obtain and use information
- Internally communicate info
- Externally communicate info
7
Q
Principles of Monitoring Activities
A
“SO D”
- Separate and/or Ongoing evaluation
- communicate Deficiencies
8
Q
Principles of Existing Control Activities
A
“CAT P”
- select and develop Control Activities
- select and develop Technology controls
- develop Policies and Procedures
9
Q
Risks inherent with internal controls
A
- Material omission (unintentional)
- Fraud (intentional)
- Management override of controls
- Illegal acts
