COSO Framework

What does the Framework's definition of internal control emphasize?

• It is gears to the achievement of strategies

• It is a process consisting of ongoing tasks and activities

• It is effected by policies and procedures

• It is able to provide absolute assurance

Which are represented on the three faces of the COSO cube?

• Components, objectives, entity structure

• Components, objective, reporting lines

• Principles, objectives, sub-objectives

• Principles, objectives, entity structure

Which component of internal control is the set of standards, processes, and structures that provide the basis for carrying out internal control across an organization?

• Risk Assessment

• Information and communication

• Monitoring activities

• Control environment

Which applies when outsourced service providers perform controls on behalf of an entity?

• Management of the entity retains responsibility for those controls

• Service provider possesses responsibility for those controls

• Management and the service provider share responsibility for those controls

• Management need not consider those controls in the context of the entity's overall system of internal control

Which reflects an inherent limitation of a system of internal control?

• Inability of management to override internal control

• Inability of parties to circumvent controls through collusion

• Reality that human judgment in decision making can be subject to a bias

• Existence of internal events within the organization's control

Segregation of duties is usually built into the selection and development of what?

• Monitoring activities

• Control activities

• Risk assessment

• Information and communication

Which party does NOT share responsibility for the system of internal control within an entity?

• Board of Directors (BOD)

• Internal audit department

• External auditor

• Senior management

According to the Framework, which is a challenge of smaller entities with regards to internal control?

• A wide span of control by senior management

• Direct interaction with personnel

• Need for formal mechanisms to communicate info relevant to operating performance

• Cost of establishing an internal audit function relative to the entity's economic resources