Coso Test Questions and Answers | 100% Pass

Coso Test Questions and Answers | 100% Pass The COSO framework treats internal control as a process designed to provide reasonable assurance regarding the achievement of objectives related to A. Reliability of financial reporting. B. Effectiveness and efficiency of operations. C. Compliance with applicable laws and regulations. D. All of the answers are correct. - ANSWER -D Which of the following statements is correct regarding corporate compensation systems and related bonuses? 1. A bonus system should be considered part of the control environment of an organization and should be considered in formulating a report on internal control. 2. Compensation systems are not part of an organization's control system and should not be reported as such. 3. An audit of an organization's compensation system should be performed independently of an audit of the control system over other functions that impact corporate bonuses. A. 1 only. 2 | P a g e Created by ©EmilyCharlene 2025. All rights reserved. B. 2 only. C. 3 only. D. 2 and 3 only. - ANSWER -A An organization's directors, management, external auditors, and internal auditors all play important roles in creating a proper control environment. Senior management is primarily responsible for A. Establishing a proper organizational culture and specifying a system of internal control. B. Designing and operating a control system that provides reasonable assurance that established objectives and goals will be achieved. C. Ensuring that external and internal auditors adequately monitor the control environment. D. Implementing and monitoring controls designed by the board of directors. - ANSWER -A Internal control can provide only reasonable assurance that the organization's objectives will be met efficiently and effectively. One factor limiting the likelihood of achieving those objectives is that A. The internal auditor's primary responsibility is the detection of fraud. B. The board is active and independent. C. The cost of internal control should not exceed its benefits. D. Management monitors performance. - ANSWER -C 3 | P a g e Created by ©EmilyCharlene 2025. All rights reserved. Which of the following is the control component that reflects the attitude and actions of the board and management regarding the significance of control within the organization? A. Risk assessment. B. Control activities. C. Control environment. D. Monitoring. - ANSWER -C According to COSO, which of the following is the most effective method to transmit a message of ethical behavior throughout an organization? A. Demonstrating appropriate behavior by example. B. Strengthening internal audit's ability to deter and report improper behavior. C. Removing pressures to meet unrealistic targets, particularly for shortterm results. D. Specifying the competence levels for every job in an organization and translating those levels to requisite knowledge and skills. - ANSWER -A Within the COSO Internal Control - Integrated Framework, which of the following components is designed to ensure that internal controls continue to operate effectively? A. Control environment. B. Risk assessment. C. Information and communication. 4 | P a g e Created by ©EmilyCharlene 2025. All rights reserved. D. Monitoring. - ANSWER -D According to COSO, which of the following is a compliance objective? A. To maintain adequate staffing to keep overtime expense within budget. B. To maintain a safe level of carbon dioxide emissions during production. C. To maintain material price variances within published guidelines. D. To maintain accounting principles that conform to GAAP. - ANSWER -B Each of the following is a method to evaluate internal controls based on the framework set by the Committee of Sponsoring Organizations (COSO), except A. Distinguishing economy risk from industry risk and enterprise risk. B. Evaluating internal control systems that focus first on risk identification of specific losses. C. Identifying mitigating controls to prevent losses.