Internal Audit Concepts 2

Question 1

What elements comprise of the Control Environment

Answer 1

1) Communication and enforcement of integrity and ethical values; (2) commitment to competence; (3) participation of those charged with governance; (4) management’s philosophy and operating style; (5) the entity’s organizational structure; (6) the entity’s assignment of authority and responsibility; and (7) human resource policies and practices. Accordingly, this is a factor to be considered with respect to the control environment.

Question 2

What elements comprise of Control Activities

Answer 2

Control activities are comprised of the following: (1) segregation of duties; (2) physical controls; (3) authorization; (4) performance reviews; and (5) information processing.

Question 3

What are the 5 components of internal control

Answer 3

COSO’s Internal Control Integrated Framework identifies five components of an internal control system: (1) control environment; (2) risk assessment; (3) control activities; (4) information and communication system; and (5) monitoring.