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Per the COSO ICIF, the main purpose of monitoring internal controls is to confirm that the internal control system can adequately address changes in:
Risks constantly change in terms of likelihood and severity. Internal controls should be created and upheld to address changes in risks.
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A company's management is experiencing a lack of segregation of duties within its application environment as its programmers have access to both development and production. The programmers have the ability to implement changes in code in production without monitoring or quality assurance. This is a deficiency in which area?
Programmers who have access to both instructions and live data can undermine management's control of data and their ability to verify that all changes have been performed in a manner consistent with their instructions.
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Of the following positions, which best describes the nature of a company's Board of Directors in relation to the company?
A company's board of directors has a fiduciary duty to act on behalf of and in the best interest of a corporation.
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According to COSO, which of the following is included in the assess and report phase of an effective approach to monitoring internal controls?
Findings result from monitoring internal controls.
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The Treadway Commission was established by:
The COSO was an independent private sector initiative.
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Of the following components, which would not be included in Risk Assessment activities?
All of these components are required when conducting Risk Assessment under the COSO framework.
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An entity successfully launching a profitable new product line represents:
Successfully launching a profitable new product is the best example of value creation.
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A company owns and operates multiple businesses in the Caribbean. Management has identified interruptions in normal operations as a potential risk resulting from storm damage caused by hurricanes. Recognizing this, the company decides to treat the potential damage as part of its business model. The company's response to this potential risk is known as:
Self-insurance or tolerating the full exposure to a risk is acceptance of that risk.
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Governance and culture is a component of COSO's ERM framework. It is supported by all of the following principles except:
Analyzing a business context is the core principle of strategy and objective setting within the COSO ERM framework.
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The core values of an entity most closely relate to its:
The word most closely related to "core values" will always be culture as "tone at the top" is to corporate governance.
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According to COSO's ERM framework, which of the following is an essential element of the governance and culture of an entity?
A commitment to core values is one of the principles underlying governance and culture.
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According to the COSO ERM framework, which of the following components would not belong to Review and Revision?
Evaluate alternative strategy is a component of Strategy and Objective Setting under the COSO ERM framework.
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The Committee on Sponsoring Organizations prepared the Internal Control-Integrated Framework:
This was the primary focus of the Internal Control-Integrated Framework established in 1992.
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An entity that maintains a strong internal audit function that reports directly to the Board of Directors is applying the ideas from which principle of effective internal control over financial reporting?
The principle of organizational structure states that reporting relationships should not undermine the commitment to effective financial reporting and internal control.
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According to COSO, an executive's deliberate misrepresentation to a banker who is considering whether to make a loan to an enterprise is an example of which of the following internal control limitations?
In this example, the internal control put in place was overridden by the executive's deliberate behavior.
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Which of the following is a violation of segregation of duties in internal control? An employee:
Regarding segregation of duties, authority needs to be separated from control. Entering and approving need to be separated for effective internal control.
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Which of the following roles would not be performed by a single individual in a company with the best segregation of duties in place?
One individual in charge of approving sales returns and depositing customer checks would create significant risk.
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Issuers are generally prohibited from making personal loans to directors or executive officers:
The only time an issuer can issue a personal loan to a director or key officer is when it is part of the ordinary course of business.
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