COSO, Internal Controls

Question 1

What are the five components of control systems?

Answer 1

1) Monitoring
2) Information and communication
3) Control Activities
4) Risk Assessment
5) Control environment

Question 2

What are the 3 primary objectives of internal controls?

Answer 2

1) Effectiveness and efficiency of operations
2) Reliability of financial reporting
3) Compliance with laws and regulations

Question 3

What are the four types of reporting?

Answer 3

1) Financial (Internal/External)- Annual F/S
2) Non-Financial (Internal/External) - Internal controls, supply chain

Internal- Divisional Financial Reporting, Bank covenant Calc.

External- Annual F/S, Internal control, report of sustainability

Question 4

Define control environment?

Answer 4

One of five components of IC

Management’s philosophy towards internal controls

Question 5

Define risk assessment?

Answer 5

One of five components of IC

Process of identifying, analyzing, an managing risk

Question 6

Define monitoring in cost framework?

Answer 6

One of five components

Ensures ongoing reliability of information