ACCA SBL Questions With Complete Solutions

Objectives of Internal Control correct answer: RORCS Risk management: Manage and control risk appropriately rather than eliminate it. Operations: Effectiveness and efficiency of operations. Reporting: ensure the reliability of internal and external reporting. Compliance: Assist compliance with laws and regulations. Safeguarding assets: safeguard the shareholders' investments and the company's assets. Inherent limitations of internal control (only reasonable assurance on the achievement of objectives, reporting and compliance) correct answer: 1. cost of control not outweighing benefits. 2. Poor judgement in decision making 3. potential for human error and fraud 4. collusion between employees 5. The possibility of controls being bypassed or overridden 6. controls only being designed to cope with routine and not non-routine transactions 7. controls being unable to cope with unforeseen circumstances 8. controls depending on the method of data prosessing 9. controls not being updated over time and becoming obselete COSO ERM Components correct answer: 1. objectives: strategic, operation, reporting, compliance 2. control env: tone a. internal environment: risk mgt philosophy; risk appetite, NEDs, integrity and ethical value; org structure; assignment of authority and responsibilities; people (mgt style; technical knowledge and experience, diversity and strong independent voices); b. Objective setting:support the org mission and consistent with risk appetite c. Event identification: internal and external events that affect the achievement of its objectives 3. risk assessment: impact and likelihood (criti