Chapter 6

Internal control is the process designed, implemented and maintained by those charged with governance, management and other personnel to provide reasonable assurance about the achievement of the entity’s objectives

• True

• False

Internal control provide reasonable assurance about the achievement of the entity’s objectives with regard to:

• Reliability of financial reporting

• Efficiency/effectiveness of operations

• Compliance with applicable laws and regulations

• All of these answers

Management responsibility for internal control

• Management is responsible for establishing and maintaining the entity’s internal control.

• + In the case of achieving information objectives, management is responsible for the preparation of financial statements in accordance with applicable accounting frameworks such as generally accepted accounting standards, laws, and regulations relating to financial statements. This means internal control has gained reasonable assurance about the reliability of financial reporting.

• + In other cases of achieving operational and compliant objectives, management has a duty on building and exercising resources and activities based on control requirements and procedures in order to get their targets. However, management designs and operates internal control after considering both the costs and benefits of the controls.

• All of the above answers

Inherent limitation of internal control (hạn chế cố hữu của kiểm soát nội bộ)

• 1)The cost of control not outweighing their benefits

• 2)The potential for human error

• 3)Collusion between employees

• 4) The possibility of controls being bypassed or overridden by management

• 5)Controls being designed to cope with routine and not nonroutine transactions

Relationship among management, internal control and internal audit in an entity

• Management in an organization is a process of using resources effectively to achieve targets.

• Internal control is a part of the management process and it has an impact on elements of that process.

• Internal auditing is a continuous process that occurs in parallel with management activities and is an important function of management. It helps managers to achieve their goals in management and operation.

• All of these answers

Components of internal control

• 1. 1, The control environment (môi trường kiểm soát)

• 2, Risk assessment (quy trình đánh giá rủi ro)

• 3, Control activities (kiểm soát hoạt động)

• 4, Information and communication (thông tin và truyền thông)

  = information system relating to financial reporting

• 5, Monitoring of controls (giám sát các kiểm soát) (intrenal audit thuộc monitoring of controls)

Nhận định nào đúng về Control Environment (môi trường kiểm soát)

• Đây là nhân tố bao trùm lên toàn bộ kiểm soát nội bộ

• Audit Committee thuộc Control Environment

• Audit Committee support cho Board of Direction

• All of these answers

Đâu là nhân tố cốt lõi của kiểm soát nội bộ

• Control activities

• The control environment

• Risk assessment

• Monitoring of controls

Control Environment means (3A) the understanding, attitude, awareness and actions of members of the boards of management and directors regarding the ICS and its importance in the entity.

• True

• False

Subcomponent of control environment:

• • Communication and enforcement of integrity and ethical values

  • Commitment to competence

• • Participation by those charged with governance

  • Management’s philosophy and operating style

• • Organizational structure

  • Assignment of authority and responsibility

• • Human resource policies and practices.