BEC CPA EXAM WITH COMPLETE SOLUTIONS
LATEST UPDATE
Principles-based approach of COSO framework - ANSWER management judgement
3 objectives of COSO - ANSWER O-operating objectives
R-reporting objectives
C-compliance objectives
5 Components of COSO Framework - ANSWER 1. Control Environment
2. Risk Assessment
3. Control Activities
4. Information and Communication
5. Monitoring
Control Environment (EBOCA) - ANSWER Ethics
Board independence and oversight
Org. structure
Commitment to competence
Accountability
Risk Assesment (SAFR) - ANSWER Specify objectives
Assess and identify changes
Fraud risk
Risk (evaluated)
,Information and Communication (OIE) - Ssmith Obtain and use information
Internally communicate information
External parties communication
Monitoring (So D) - Ssmith Segregation/ongoing evaluations
Deficiencies communicated
Existing Control Activities (CA T P) - Ssmith Control Activities
Technology controls
Policies and procedures
With reference to the COSO Enterprise Risk Management, define risk - ANSWER There
is a possibility events may occur and affect the achievement of strategy and business
objectives
ERP - ANSWER Enterprise Risk Management is the culture, capabilities, and practices
integrated with strategy-setting and performance, that organizations rely on to manage
risk in creating, preserving and realizing value
5 components of ERM - ANSWER G-governance and culture
O-objective setting/strategy
P-performance
R-review and revision
O-ongoing information, communication, and reporting
Governance & Culture ("DOVES") - ANSWER D-desired culture
O-oversight from board
V-values commitment
,E-employees (capable)
S-structure established
Objective setting/strategy (SOAR) - ANSWER S-strategies (alternative)
O-objectives (business)
A-analyzes business context
R-defines risk appetite
Performance (VAPIR) - ANSWER V-view (portfolio)
A-assesses severity of risk
P-prioritizes risk
I-identifies risks (events)
R-responses to risk implemented
Review and revision (SIR) - ANSWER S-substantial change
I-improvement in ERM
R-reviews risk and performance
Ongoing information, communication, reporting TIP
T-technology and information leveraged
I-information risk communicated
P-performance and risk culture reports
Inherent Risk ERM ANSWER risk to an entity in the absence of any direct or focused
actions by management to alter its severity
Target residual risk ANSWER risk entity prefers to assume knowing that management
will or took action to alter the severity of the risk
, Actual residual risk - ANSWER risk remaining after management has taken action
5 common risk responses - ANSWER Avoid
Share
Accept
Pursue
Reduce
Title III of the Sarbanes-Oxley Act, "Corporate Responsibility," includes the following
topics pertaining to financial reporting: - ANSWER Public company audit committees
Corporate responsibility for financial repots
Improper influence on conduct of audits
Forfeiture of certain bonuses and profits
Audit Committee Responsibilities - ANSWER 1. Appointment of the auditor
2. Auditor compensation
3. Auditor accountability
a. disagree on matters between management and the auditor
b. the auditor shall report directly to the audit committee
The Sarbanes-Oxley Act defines the criteria for the independence of audit committee
members for issuers as:-ANSWER 1. Each member of the audit committee shall be a
member of the board of directors of the issuer but shall be otherwise independent
2. audit committee members may not accept any consulting, advisory, or other
compensation or fees from the issuer other than pursuant to their role on the board
3. audit committee members may not be an affiliated person of the issuer or any
subsidiary of the issuer.
SOX lists the following corporate responsibilities in terms of internal controls that must
LATEST UPDATE
Principles-based approach of COSO framework - ANSWER management judgement
3 objectives of COSO - ANSWER O-operating objectives
R-reporting objectives
C-compliance objectives
5 Components of COSO Framework - ANSWER 1. Control Environment
2. Risk Assessment
3. Control Activities
4. Information and Communication
5. Monitoring
Control Environment (EBOCA) - ANSWER Ethics
Board independence and oversight
Org. structure
Commitment to competence
Accountability
Risk Assesment (SAFR) - ANSWER Specify objectives
Assess and identify changes
Fraud risk
Risk (evaluated)
,Information and Communication (OIE) - Ssmith Obtain and use information
Internally communicate information
External parties communication
Monitoring (So D) - Ssmith Segregation/ongoing evaluations
Deficiencies communicated
Existing Control Activities (CA T P) - Ssmith Control Activities
Technology controls
Policies and procedures
With reference to the COSO Enterprise Risk Management, define risk - ANSWER There
is a possibility events may occur and affect the achievement of strategy and business
objectives
ERP - ANSWER Enterprise Risk Management is the culture, capabilities, and practices
integrated with strategy-setting and performance, that organizations rely on to manage
risk in creating, preserving and realizing value
5 components of ERM - ANSWER G-governance and culture
O-objective setting/strategy
P-performance
R-review and revision
O-ongoing information, communication, and reporting
Governance & Culture ("DOVES") - ANSWER D-desired culture
O-oversight from board
V-values commitment
,E-employees (capable)
S-structure established
Objective setting/strategy (SOAR) - ANSWER S-strategies (alternative)
O-objectives (business)
A-analyzes business context
R-defines risk appetite
Performance (VAPIR) - ANSWER V-view (portfolio)
A-assesses severity of risk
P-prioritizes risk
I-identifies risks (events)
R-responses to risk implemented
Review and revision (SIR) - ANSWER S-substantial change
I-improvement in ERM
R-reviews risk and performance
Ongoing information, communication, reporting TIP
T-technology and information leveraged
I-information risk communicated
P-performance and risk culture reports
Inherent Risk ERM ANSWER risk to an entity in the absence of any direct or focused
actions by management to alter its severity
Target residual risk ANSWER risk entity prefers to assume knowing that management
will or took action to alter the severity of the risk
, Actual residual risk - ANSWER risk remaining after management has taken action
5 common risk responses - ANSWER Avoid
Share
Accept
Pursue
Reduce
Title III of the Sarbanes-Oxley Act, "Corporate Responsibility," includes the following
topics pertaining to financial reporting: - ANSWER Public company audit committees
Corporate responsibility for financial repots
Improper influence on conduct of audits
Forfeiture of certain bonuses and profits
Audit Committee Responsibilities - ANSWER 1. Appointment of the auditor
2. Auditor compensation
3. Auditor accountability
a. disagree on matters between management and the auditor
b. the auditor shall report directly to the audit committee
The Sarbanes-Oxley Act defines the criteria for the independence of audit committee
members for issuers as:-ANSWER 1. Each member of the audit committee shall be a
member of the board of directors of the issuer but shall be otherwise independent
2. audit committee members may not accept any consulting, advisory, or other
compensation or fees from the issuer other than pursuant to their role on the board
3. audit committee members may not be an affiliated person of the issuer or any
subsidiary of the issuer.
SOX lists the following corporate responsibilities in terms of internal controls that must
