Flashcards
COSO chapter 5 and Ramos
Cards in this deck (14)
- 1What is control environment?The control environment is the set of standards, processes, and structures
that provide the basis for carrying out internal control across the organization. - 2What are principles of control environment?1. commitment to integrity and ethical values.
2. Board of directors is independent of management and exercises oversight of internal control
3. Management establishes, with board oversight, appropriate structure, reporting lines
4. Commitment to attract, develop and retain competent individuals
5. individuals are accountable for their internal control responsiblities - 3What are points of focus of 1st principle of contr.env?Tone at the Top,
Establishes Standards of Conduct
Evaluates Adherence to Stand of Conduct
Addresses deviation in timely manner - 4What is tone at the top?Leading by example, consistency between management's action and words,
Demonstrated by
missionand value statements, directives, guidelines, actions and decisions of management - 5What reasons can you cite as non-adherence to standards of conduct?Tone at the top does not convey expectations,
board does not provide impartial oversight of management,
lack of adequate controls at lower levels;
coercion by superiors, peers to cut corners, a weak internal control function - 6What are point of focus of principle 2 of control environment?Board establishes oversight responsibilities,
applies relevant expertise,
operates independently;
provides oversight of internal control - 7What is the 3rd principle of control environment?Management establishes, with board
oversight, structures, reporting lines, and appropriate
authorities and responsibilities in the pursuit of objectives - 8What is 4th principle of control environment?The organization demonstrates a commitment
to attract, develop, and retain competent individuals in
alignment with objectives. - 9What is 5th principle of control environment?The organization holds individuals
accountable for their internal control responsibilities in the
pursuit of objectives. - 10What is are main point of focus of 5th principle?Enforces Accountability through Structures, Authorities, and Responsibilities;
Establishes Performance Measures, Incentives, and Rewards - 11According to Ramos, how effectiveness of internal control can be evaluated?Establish a benchmark (such as COSO framework) and design tests
- 12What do design tests consist of?A review of relevant documentation, inquiries of management and employees, direct observation
- 13What examples of review of documentation could you provide?Code of conduct,
personnel policies,
board of directrs and audit committee charters
other informal communication from management - 14What questions can be asked according to Ramos?Have you observed unacceptable behavior, if you did, what were your actions?
if you were to report unethcial behaviour, what do you think management will do?
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- Business/Economics Flashcards on COSO chapter 5 and Ramos, created by Archimed Nemes on 29/09/2017.
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