COSO - Internal Control Flashcards
What are the 5 components of an internal control system?
- Control Environment
- Risk Assessment
- Control Activities
- Monitoring
- Information and Communication
What are the objectives of COSO?
- Operations objectives
- Reporting objectives
- Compliance objectives
17 Principals of COSO
The organization needs to demonstrate a commitment to integrity and ethical values
Control Environment
17 Principals of COSO
The board of directors demonstrates independence from management and exercises oversight of the development and performance of internal control
Control Environment
17 Principles of COSO
Management establishes, with board oversight, structures, reporting lines, and appropriate authorities and responsibilities in pursuit of the objectives
Control Environment
17 Principles of COSO
The organization demonstrates a commitment to attract, develop, and retain competent individuals in alignment with objectives
Control Environment
17 Principles of COSO
The organization holds individuals accountable for their internal control responsibilities in pursuit of objectives
Control Environment
17 Principles of COSO
The organization specifies objectives with sufficient clarity to enable the identification and assessment of risk relating to objectives
Risk Assessment Principles
17 Principles of COSO
The organization 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
Risk Assessment Principles
17 Principles of COSO
The organization considers the potential for fraud that could impede the achievement of objectives
Risk Assessment Principles
17 Principles of COSO
The organization identifies and assesses changes that could significantly impact the system of internal control
Risk Assessment Principles
17 Principles of COSO
The organization selects and develops control activities that contribute to the mitigation of risks to the achievement of objectives to acceptable levels
Control Activities
17 Principles of COSO
The organization selects and develops general control activities over technology to support the achievement of objectives
Control Activities
17 Principles of COSO
The organization deploys control activities through policies that establish what is expected and procedures that put policies into action
Control Activities
17 Principles of COSO
The organization obtains or generates and uses relevant, quality information to support the functioning of internal control
Information and Communication Principles
17 Principles of COSO
The organization internally communicates information, including objectives and responsibilities for internal control, necessary to support the functioning of internal control
Information and Communication Principles
17 Principles of COSO
The organization communicates with external parties regarding matters affecting the functioning of internal control
Information and Communication Principles
17 Principles of COSO
The organization selects, develops, and performs ongoing and/or separate evaluations to ascertain whether the components of internal control are present and functioning
Monitoring Activities
17 Principles of COSO
The organization evaluates and communicates internal control deficiencies in a timely manner to those parties responsible for taking corrective action, including senior management and the board of directors, as appropriate
Monitoring Activities
COSO definition of Internal Control
Internal control is a process—effected by the entity’s board of directors, management, and other personnel—designed to provide reasonable assurance regarding the achievement of objectives in the following categories:
Effectiveness and efficiency of operations
Reliability of financial and nonfinancial reporting
Compliance with applicable laws and regulations
What are the 5 principles of “Control Environment”
- Integrity and ethical values
- Board of directors demonstrates independence
- Management establishes structures, reporting lines, and appropriate authorities and responsibilities in order to achieve objectives
- Competence (attract, develop and retain competent individuals)
- Accountability
