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Flashcards in COSO Deck (12):

What is COSO?

Created by five organizations to develop a internal control model; 3 dimensions


Why do we have internal control?; three reasons ORC

1)Effectiveness and efficiency of operations - OPERATIONS; 2) Reliability of financial reporting - REPORTING; 3)Compliance with laws & regulations - COMPLIANCE


Four types of reporting?

Financial/Non-financial; Internal/External


What are the five components of an internal control system? (CRIMC)

Control environment - Management's philosophy, organizational structure

Risk assessment - Process of identifying, analyzing, and managing risks with achieving organization's objectives

Information and communication

Monitoring - Ensure ingoing reliability of information

Control activities - Policies and procedures that ensure actions are taken to address risks related to achievement of management's objectives


What is the COSO ERM model?

Expands upon regular COSO model


What are the four elements of COSO ERM representing objectives of managing risk (WHY?)

Strategic, operations, reporting, compliance (strategic is the new one)


What are the eight control components of COSO ERM? HINT: original has 5, this has 8

Internal Environment, Event Identification, Risk Assessment, Risk Response, Control Activities, Information & Communication, Monitoring


What are the four organizational levels of COSO ERM?

Entity, division, business unit, subsidiary


Two components of analyzing and decomposing risk

1) Likelihood of a loss; 2) Amount of loss

Expected value of a loss is the likelihood of a loss x amount


Why monitor internal controls?

Things change; lessen the effects of entropy (identify before they become problems)


Who are two attributes of those that evaluate internal controls?

Competence and Objectivity;

Competence - Evaluator's knowledge of controls and processes


What are compensating controls?

Accomplish the same objective as another control

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