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Flashcards in COSO Deck (12):
1

What is COSO?

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

2

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

3

Four types of reporting?

Financial/Non-financial; Internal/External

4

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

5

What is the COSO ERM model?

Expands upon regular COSO model

6

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

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

7

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

8

What are the four organizational levels of COSO ERM?

Entity, division, business unit, subsidiary

9

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

10

Why monitor internal controls?

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

11

Who are two attributes of those that evaluate internal controls?

Competence and Objectivity;

Competence - Evaluator's knowledge of controls and processes

12

What are compensating controls?

Accomplish the same objective as another control

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