BEC Test Questions & Answers 2024/2025
How does the principles-based approach support an effective system of internal control under the COSO framework? - ANSWERSAn effective system of internal control requires the use of judgement in determining the sufficiency of controls, applying the proper...
How does the principles-based approach support an effective system of internal control under the COSO
framework? - ANSWERSAn effective system of internal control requires the use of judgement in
determining the sufficiency of controls, applying the proper controls, and assessing the effectiveness of
the system of internal controls. The principles-based approach of the COSO framework emphasizes the
importance of management judgement.
What are the components of the COSO Internal Control Framework? - ANSWERSCRIME
Control environment
Risk assessment
Information and Communication
Monitoring
Existing control activities
What are the five principles associated with the control environment component of the COSO
framework? - ANSWERSEBOCA
Ethics and integrity
Board independence and oversight
Organizational structure
Commitment to competence
Accountability
What are the four principles associated with the risk assessment component of the COSO framework? -
ANSWERSSAFR
Specify objectives
identify and Assess changes
consider potential for Fraud
,identify and analyze Risks
What are the three principles associated with the existing control activities component of COSO? -
ANSWERSCAT P
Control Activities
Technology controls
Policies and procedures
What are the three principles associated with the information and communication component of COSO?
- ANSWERSOIE
Obtain and use information
Internally communicate information
communicate with External parties
Name and describe three objectives within the COSO framework. - ANSWERS1) Operating objectives-
pertain to the effectiveness and efficiency of the entity's operations.
2) Reporting objectives- pertains to the reliability, timeliness, and transparency of entity's reporting.
Compliance objectives- necessary to ensure the entity is adhering to all laws and regulations.
What is the purpose of the COSO cube? - ANSWERSThe COSO cube shows a graphical three-dimensional
depiction of the relationship between an entity's three objectives, its five integrated control
components, and the entity's organizational structure.
What is necessary for the five components of the COSO framework to create an effective internal control
environment for an entity? - ANSWERSFive component and 17 related principles must be PRESENT and
FUNCTIONING.
Additionally, the 5 components must operate together as an integrated system, to reduce the risk to an
acceptable level that the entity will not achieve its objectives.
Differentiate the COSO framework from the Audit framwork. - ANSWERSThe 5 components of the COSO
framework are useful for identifying and evaluating the effectiveness of an entity's internal control.
, In contrast, the audit framework focuses on how a given control prevents or detects material
misstatements in an entity's financial reporting.
Identify some inherent limitations that may exist even with an effective internal control system. -
ANSWERSBreakdowns in internal control due to human error or human failure.
Issues pertaining to the suitability of the entity's objectives.
External events beyond the control of the entity.
Faulty of biased judgment in decision making.
Management override of controls.
Circumvention of controls through collusion.
What constitutes ineffective internal control under the COSO framework? - ANSWERSA major deficiency
is identified related to the presence and functioning of a component or relevant principle, or with
respect to the components operating together in an integrated manner, the entity may not conclude that
it has an effective internal control system in place under the COSO framework.
What are the two principles associated with the monitoring component of COSO? - ANSWERSSO D
Separate and Ongoing evaluations
communication of Deficiencies
According to COSO, what is the definition of risk? - ANSWERSRisk is the possibility that events will occur
and affect the achievement of strategy and business objectives.
How is enterprise risk management defined according to COSO? - ANSWERSEnterprise risk management
is the culture, capabilities, and practices, integrated with strategy-setting and performance, that
organizations rely on to manage risk in creating, preserving, and realizing value.
Identify the 5 components of enterprise risk management. - ANSWERSGO PRO
Governance and culture
strategy and Objective setting
Performance
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