KeyConcepts

Question 1

According to COSO, what is internal control?

Answer 1

Internal control is a process, effected by the entity’s board of directors, management, and other personnel designed to provide reasonable assurance regarding the achievement of objectives relating to operations, reporting, and compliance.

Question 2

1. The principle relating to the control environment component include:

Answer 2

1. the organization demonstrates a commitment to integrity and thical values.
2. The board of directors demonstrates independence from management and exercises oversight of athe development and performance of internal control
3. Management establishes, with board oversight, structures, reporting lines, and appropriate authorities and responsibilities in the pursuit of objectives.
4. The organization demonstrates a commitment to attract, develop and retain competent individuals in alignment with objectives.
5. The organization holds individuals accountable for their internal control responsibilities in the pursuit of objectives.

Question 3

2. The Principles related to risk assessment include:

Answer 3

1. The organization specifies objectives with sufficient clarity to enable the identification and assessment of risks relating to objectives
2. the organization 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.
3. The organization considers the potential for fraud in assessing risks to the achievement of objectives.
4. the organization identifies and assesses changes that could significantly impact the system of internal control.

Question 4

3. The Principles related to the control activities component include:

Answer 4

1. the organization selects and develops control activities that contribute to the mitigation of risk to the achievement of objectives to acceptable levels.
2. the organization selects and develops general control activities over technology to support the achievement of objectives.
3. the organization deploys control activities through policies that establish what is expected and in procedures that put policies into action

Question 5

4. The principles related to the information and communication component: the principles

Answer 5

1. The organization obtaions or generates and uses relevant, quality information to support the functioning of internal control.
2. The organization obtains or generates and uses relevant, quality information to support the functioning of internal control.
3. The organization communicates with external parties regarding matters affecting the functioning of internal control.

Question 6

5. Monitoring: Principles

Answer 6

1. the organization selects, develops, and performs ongoing and/ or separate evaluations to ascertain whether the components of internal control are present and functioning.
2. The organization evaluates and communicates 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.