Internal Control Crap (Chapter 1)

Question 1

Framework Objectives (three of them)

Answer 1

Operations - effectiveness and efficiency of an entity’s operations
Reporting - reliability, timeliness, and transparency of an entity’s external and internal financial and nonfinancial reporting
Compliance - adhering to applicable laws and regulations

Question 2

Elements of COSO Framework

Answer 2

Control Environment
Risk Assessment
Information and Communication
Monitoring
Existing Control Activities

Question 3

Control Environment

Answer 3

TONE AT THE TOP - "EBOCA"
Ethics and integrity
Board independence
Organizational structure
Commitment to competence
Accountability

Question 4

Risk Assessment

Answer 4

MISSTATEMENT AND/OR FRAUD - “EAR”
Event identification
Assessment of risk
Response to risk

Question 5

Information and Communication

Answer 5

“FACT” - fair, accurate, complete and timely
Internal (internal audit, audit committee, Board)
External (auditor, stockholders)

Question 6

Monitoring

Answer 6

Ongoing and/or separate evaluations (frequency of testing dictated by risk)
Communication of deficiencies

Question 7

Existing Control Activities

Answer 7

MITIGATE RISK
Policies and procedures
Detective and preventive
Segregation of duties