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Flashcards in Deck 1 Deck (20):
1

Principle of Obtain and Use information

Applied when the organization obtains or generates and uses relevant, high-quality information to support the functioning of the control

2

External Communication

Matters affecting the achievement of financial reporting should be communicated with outside parties

3

The Treadway Commission (COSO) was established by

Private sponsoring organizations

4

Inherent risk vs. residual risk

Inherent: Risk to an entity in the absence of any actions taken by management; Residual: risk that remains after management responds to the risk

5

Risk appetite has generally been exceeded when

The likelihood and impact of negative events significantly exceeds residual risk

6

What supports the mission of an organization?

Strategic objectives that are implemented via various strategies and related objectives

7

Compliance objectives include

Adherence to the laws, rules, and regulations associated with operations

8

Four categories of ERM entity objectives

1) Strategic, 2) Operations, 3) Reporting, and 4) Compliance

9

Who provides ERM oversight?

Board of Directors

10

Who selects and removes corporate officers?

The board of directors

11

Definition of COSO framework

Issued to assist organizations in developing comprehensive assessments of internal control effectiveness

12

Three major objectives of the COSO framework and what is its main focus?

1) Operations; 2) Reporting; and 3) Compliance; Focus is on reporting objectives

13

Five components of internal control (CRIME)

Control environment, Risk Assessment, Information and Communication, Monitoring, Existing control activities

14

Monitoring activities

Ongoing and/or separate evaluations; communicating deficiencies

15

Is ERM or COSO broader in scope?

Enterprise Risk Management (ERM)

16

Components of Enterprise Risk Management (IS EAR AIM)

Internal Environment, Setting objectives, Event Identification, Assessment of Risk, Risk Response, Control activities, Info and communication, Monitoring

17

Definition of productivity

Measure of the ratio of outputs achieved to the inputs of production

18

Total Factor Productivity Ratio

Quantity of all output/costs of all inputs used

19

Partial Factor Productivity Ratio

Quantity of output produced relative to a specific quantity of inputs used

20

Control Chart

Used to determine "zero" defects; compares actual results to an acceptable range