Defining Internal Controls-Coso Exam
Questions With Correct Answers
What do you use the COSO Framework to do? 1) Document ICS.
2) Evaluate whether or not it appears effective.
3) As a basis for designing tests of the relevant assertions associated with each significant
account.
COSO's 5 essential components of an effective internal control system: 1) The Control
Environment.
2) Risk Assessment.
3) Control Activities.
4) Information and Communication.
5) Monitoring.
COSO's 5 essential components of an effective internal control system: The Control
Environment 1) TONE AT THE TOP- The organization demonstrates a commitment to
integrity and ethical values. {Internal controls are important}
2) The board demonstrates independence from management. And exercises oversight of the
development and performance of internal control.
3) Management establishes, structures, reporting lines, and appropriate authorities and
responsibilities in the pursuit of objectives.
, 4) HIRE THE RIGHT PEOPLE.
5) ACCOUNTABILITY.
COSO's 5 essential components of an effective internal control system: Risk Assessment
The identification of all things that could negatively affect the company's ability to present
financial information consistent with all of the management assertions and the mitigation of their
impact with pre-emptive actions.
The 4 Principles of Risk Assessment per COSO: 1) The organization specifies objectives
with sufficient clarity to enable the identification and assessment of risks relating to objectives.
2) Identifies risks to the achievement of its objectives across the entity and analyzes risks as a
basis for determining how the risks should be managed.
3) Considers the potential for fraud in assessing risks to the achievement of objectives.
4) Identifies and assesses changes that could significantly impact the system of internal control.
COSO's 5 essential components of an effective internal control system: Control Activities
Specific action steps taken to prevent, detect, and correct errors/frauds within each
transaction cycles AND across the entire organization
Questions With Correct Answers
What do you use the COSO Framework to do? 1) Document ICS.
2) Evaluate whether or not it appears effective.
3) As a basis for designing tests of the relevant assertions associated with each significant
account.
COSO's 5 essential components of an effective internal control system: 1) The Control
Environment.
2) Risk Assessment.
3) Control Activities.
4) Information and Communication.
5) Monitoring.
COSO's 5 essential components of an effective internal control system: The Control
Environment 1) TONE AT THE TOP- The organization demonstrates a commitment to
integrity and ethical values. {Internal controls are important}
2) The board demonstrates independence from management. And exercises oversight of the
development and performance of internal control.
3) Management establishes, structures, reporting lines, and appropriate authorities and
responsibilities in the pursuit of objectives.
, 4) HIRE THE RIGHT PEOPLE.
5) ACCOUNTABILITY.
COSO's 5 essential components of an effective internal control system: Risk Assessment
The identification of all things that could negatively affect the company's ability to present
financial information consistent with all of the management assertions and the mitigation of their
impact with pre-emptive actions.
The 4 Principles of Risk Assessment per COSO: 1) The organization specifies objectives
with sufficient clarity to enable the identification and assessment of risks relating to objectives.
2) Identifies risks to the achievement of its objectives across the entity and analyzes risks as a
basis for determining how the risks should be managed.
3) Considers the potential for fraud in assessing risks to the achievement of objectives.
4) Identifies and assesses changes that could significantly impact the system of internal control.
COSO's 5 essential components of an effective internal control system: Control Activities
Specific action steps taken to prevent, detect, and correct errors/frauds within each
transaction cycles AND across the entire organization
