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CPA Exam - BEC - COSO Internal Control Frameworks (1)
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CPA Exam - BEC - COSO Internal Control Frameworks (1)
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CPA Exam - BEC - COSO Internal ControlFrameworks
What is COSO Internal Control Framework used for - ANS-used by company management and
its Board to obtain an initial understanding of what constitutes an effective system of internal
control and to provide insight as to when internal controls are being properly applied within the
organization.
The framework also provides confidence to external stakeholders that an organization has a
system of internal control in place that is conducive to achieving its objectives.
Definition of Internal control - ANS-a process that is designed and implemented by an
organization's management, Board, and other employees to provide reasonable assurance that
the organization will achieve its operating, reporting, and compliance objectives.
COSO Cube - ANS-3 Objectives shown as columns
5 IC Components shown as rows (CRIME)
Organizational Structure shown as third dimension
Framework Objectives - ANS-1. Operations Objectives (effectiveness & efficiency)
2. Reporting Objectives (reliable, timely, transparent)
3. Compliance Objectives (laws & regulations)
Operations Objectives - ANS-Relate to the effectiveness and efficiency of the entity's
operations. Includes financial and operational performance goals as well as ensuring that the
assets of the organization are adequately safeguarded against potential losses.
Reporting Objectives - ANS-Pertain to the reliability, timeliness, and transparency of an entity's
external and internal financial and nonfinancial reporting as established by regulators,
accounting standard setters, or the firm's internal policies.
Compliance Objectives - ANS-Established to ensure the entity is adhering to all applicable laws
and regulations.
Components of Internal Control - ANS-CRIME
Control Environment
Risk Assessment
Information & Communication Systems
Monitoring
Existing Control Activities
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