COSO

Question 1

Who are the 5 organizations that came together and formed COSO?

Answer 1

1) AICPA 2) the institute of internal auditor’s 3) the institute of management accountants 4) the American accounting association 5) the financial executives institute

Question 2

Goal for COSO

Answer 2

To develop an integrated internal control model to guide efforts to articulate and improve accounting controls.

Question 3

What are the five components of COSO

Answer 3

Control environment, risk assessment, control activities, information and communication, and monitoring activities

Question 4

What are the three objectives of COSO

Answer 4

Operations, reporting, and compliance.

Question 5

What is the purpose of COSO ERM?

Answer 5

Expounds upon the original COSO. Created to facilitate a broader understanding of the entity’s overall strategies and goals, and the threats to those strategies and goals.

Question 6

What are the 8 components of COSO ERM?

Answer 6

Internal environment, risk assessment, controll activities, information and communication, monitoring activities, objective setting, event identification, and risk response.

Question 7

What are the 4 responses to risk.

Answer 7

Observed risks may be avoided, reduced, shared, or accepted.

Question 8

What are the four objectives of COSO ERM?

Answer 8

Strategic, operations, reporting, and compliance.

Question 9

What are the goals of risk management?

Answer 9

1. Align risk appetite and strategy. 2. Improve risk responses. 3. Reduce operational surprises and losses. 4. identify and manage multiple and cross-enterprise risks. 5. Seize opportunities. 6. Improve capital deployment.

Question 10

What four critical activities related to internal control, should be separated to lessen fraud risk? SoD

Answer 10

1. Authorizing Events. 2. Recording Events. 3. Safeguarding resources related to events (custody). 4. Reconciling, overseeing and auditing.

Question 11

Define the component: Control Environment

Answer 11

Management’s philosophy toward controls, organizational structure, system of authority and responsibility, personnel practices, policies, and procedures. This component is the core or foundation of any system of internal control.

Question 12

Define the component: Risk Assessment

Answer 12

The process of identifying, analyzing, and managing the risks involved in achieving the organizations objectives.

Question 13

Define the component: Information and Communication

Answer 13

The information and communication systems that enable an organization’s people to identify, process, and exchange the information needed to manage and control operations.

Question 14

Define the component: Monitoring

Answer 14

In order to ensure the ongoing reliability of information, it is necessary to monitor and test the system and its data.

Question 15

Define the component: Control Activities

Answer 15

The policies and procedures that ensure that actions are taken to address the risks related to the achievement of management’s objectives.

Question 16

What is Enterprise Risk Management?

Answer 16

ERM concerns the identification and management of events and circumstances that may impact the ability of an entity to achieve its objectives.

Question 17

Elements of risk.

Answer 17

1. Likelyhood of a loss.

2. Amount of a loss. These two elements multiplied together gives you the expected value of a loss.