COSO Flashcards
what does COSO stand for?
the committee of sponsoring organizations of the treadway commmission
who is part of COSO?
a joint initiative of the five private sector professional accounting, auditing and finance organizations
goal of COSO
providing thought leadership through the development of frameworks and guidance on enterprise risk management, internal control and fraud deterrence
def: internal control
a process, effected by an entity’s BofD, management and other personnel to provide reasonable assurance regarding objectives
the objectives of internal control follow 3 categories
- effectiveness and efficiency of operations
- reliability of financial reporting
- compliance with applicable laws and regulations
5 components of COSO framework
control environment risk assessment control activities information and communication monitoring
def: control environment
set of standards, processes and structures that provide a basis to carry out effective internal control activities across an enterprise
def: risk assessment
process of determining how all levels of risks will be managed
def: internal control activities
actions established through enterprise policies and procedures that help ensure management’s directives to mitigate risk are carried out
types of internal control activities (6)
- verifications
- reconciliations
- authorization and approvals
- physical controls
- controls over standing data
- supervisory controls
def: info and communication
an enterprise needs to develop and deliver many forms and types of competent information from and to management
def: monitoring
assess whether each of the other objectives or components of COSO are present and functioning
johnny control environment
attitude towards safety (strength)
johnny risk assessment
objective is safety, risk of someone breaking in and so precaution install alarm (strength) because he assessed the risk of someone breaking in as high
johnny control activities
locking doors (fail) turning on alarm (strength)
