CPA - COSO 17 Principles

Question 1

Control Environment (5 principles)

Answer 1

1. Commitment to integrity and ethical values
2. BoD demonstrates independence of management, and oversees the development and monitoring of internal control
3. Mgmt establishes organizational structures, reporting lines, and appropriate authorities
4. Competence - the organization will commit to attracting and retaining competent individuals
5. Accountability - The organization holds individuals accountable for their internal control responsibilities

Question 2

Risk assessment (4 principles)

Answer 2

1. Objectives - The organization specifies objectives w/sufficient clarity to enable the ID and assessment of risks that threaten the achievement of objectives
2. Assessment - Basically risk assessment
3. Fraud - the organization considers the potential for fraud in assessing risks to the achievement of objectives
4. Change management - The organization IDs and assesses changes in the external environment and new leadership

Question 3

Control Activities (3 principles)

Answer 3

1. Risk reduction - Organization control activities reduce the risks to the achievement of objectives to an acceptable level
2. Technology controls - The organization selects and implements general controls over technology, which support the achievement of its objectives
3. Policies - The organization deploys control activities through policies and procedures that establish stakeholder expectations

Question 4

Information and Communication (3 principles)

Answer 4

1. Quality - Relevant, high quality info supports internal control processes
2. Internal - internal communication supports internal control processes
3. External - communication w/outsiders support internal control processes