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BEC CPA Exam (Module 1) questions with actual answers.
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BEC CPA Exam (Module 1) questionswith actual answers.
3 Categories of Objectives within the COSO framework ANS -ORC
1. Operations
2. Reporting (focus of COSO)
3. Compliance
5 Components of Internal Control ANS -CRIME (applies to all 3 objectives)
Control Environment
Risk Assessment
Information and Communication
Monitoring
Existing Control Activities
Control Environment (CRIME) - 5 principles ANS -EBOCA
Ethics
Board independence
Organizational Structure
Commitment to Competence
Accountability
Risk Assessment (CRIME) 4 principles ANS -SAFR
Specify Objectives
,Risks (identify and analyze)
Fraud (potential)
Assess Changes (external environment, business model, leadership)
Information and Communication (CRIME) 3 principles ANS -OIE
Obtain and use information (FACT - fair, accurate, complete, timely)
Internally Communicate Information - internal auditors, audit committee, management
Externally Communicate Information - CPA firm
Monitoring Activities (CRIME) 2 principles ANS -SO D
Separate/ongoing evaluations
Deficiencies (Communication of)
Existing Control Activities (CRIME) 3 principles ANS -CA T P
Control Activities (select and develop)
Technology Controls (select and develop)
Policies and Procedures (deployment of)
All 5 components (CRIME) and 17 principles that are relevant to be both present and functioning: ANS -
Present : components and relevant principles are INCLUDED IN THE DESIGN and implementation of the
internal control systems
Functioning (Operating effectively): components and relevant components are currently OPERATING AS
DESIGNED
Ineffective Internal Control : COSO ANS -=Risk ORC not achieved increases
Internal Control (Framework) Limitations ANS --Human failure
, -faulty or biased judgment
-suitability of the entity's objectives
-external events beyond control
-collusion
-management override
Using the COSO Framework Document ANS -COPS
Overall Assessment
Component Evaluation
Principal Evaluation
Summary of Internal Control Deficiencies
Common Risks Identified Using the COSO Framework ANS --Material omission (unintentional)
-Fraud (intentional misrepresentation/misappropriation)
-Management Override of Controls (personal gain- lead to fraud)
-Illegal acts (violating gov't regulations/conflicts/higher standards)
Committee on Sponsoring Organizations prepared the Internal Control Integrated Framework ANS -To
help businesses assess internal controls
Enterprise Risk Management ANS -COSO issued in 2004 to assist organizations in developing a
comprehensive response to risk management
What is risk? ANS -the possibility that events will occur and affect the achievement of strategy and
business objectives
Management decisions will affect the development of ??? ANS -value (CPER)
-creation
-preservation
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