COSO Principals

Question 1

COSO: Principals for the Control Environment

Answer 1

Commitment to integrity and ethical values.

Board of directors independent from management

Responsibilities/Lines of authority in the pursuit of objectives established by management

Commitment to attract, develop, and retain competent individuals.

Accountability - Holds individuals accountable

Question 2

COSO: Risk Assessment

Answer 2

Specifies objectives with sufficient clarity to enable the identification and assessment of risks relating to objectives.

Identifies risks to the achievement of its objectives across the entity and analyzes risks as a basis for determining how the risks should be managed.

Considers the potential for fraud in assessing risks to the achievement of objectives.

Identifies and assesses changes that could significantly affect the system of internal control.

Question 3

COSO: Control Activities

Answer 3

The organization selects and develops control activities that contribute to the mitigation of risks to the achievement of objectives to acceptable levels.

The organization selects and develops general control activities over technology to support the achievement of objectives.

The organization deploys control activities through policies that establish what is expected and procedures that put policies into action.

Question 4

COSO: Information & Communication

Answer 4

obtains or generates and uses relevant, quality information to support the functioning of internal control.

internally communicates information, including objectives and responsibilities for internal control, necessary to support the functioning of internal control.

communicates with external parties regarding matters affecting the functioning of internal control

Question 5

COSO: Monitoring Activities

Answer 5

Selects, develops, and performs ongoing and/or separate evaluations to ascertain whether the components of internal control are present and functioning.

Evaluates and communicates internal control deficiencies in a timely manner to those parties responsible for taking corrective action, including senior management and the board of directors, as appropriate.