This document is an exercise on the internal control framework from Far Eastern University. It contains multiple choice questions testing understanding of key concepts from COSO's internal control integrated framework, including the three categories of objectives, five components of internal control, and two principles of control environment. Correct answers are reliability of financial reporting, control environment, cost of internal control not exceeding benefits, segregation of duties, designing and operating controls to achieve objectives and goals, demonstrating appropriate behavior by example, monitoring and learning, establishing proper organizational culture and controls, and control activities.
This document is an exercise on the internal control framework from Far Eastern University. It contains multiple choice questions testing understanding of key concepts from COSO's internal control integrated framework, including the three categories of objectives, five components of internal control, and two principles of control environment. Correct answers are reliability of financial reporting, control environment, cost of internal control not exceeding benefits, segregation of duties, designing and operating controls to achieve objectives and goals, demonstrating appropriate behavior by example, monitoring and learning, establishing proper organizational culture and controls, and control activities.
Original Title
GONZAGA_SEC1_EXERCISES ON INTERNAL CONTROL FRAMEWORK
This document is an exercise on the internal control framework from Far Eastern University. It contains multiple choice questions testing understanding of key concepts from COSO's internal control integrated framework, including the three categories of objectives, five components of internal control, and two principles of control environment. Correct answers are reliability of financial reporting, control environment, cost of internal control not exceeding benefits, segregation of duties, designing and operating controls to achieve objectives and goals, demonstrating appropriate behavior by example, monitoring and learning, establishing proper organizational culture and controls, and control activities.
This document is an exercise on the internal control framework from Far Eastern University. It contains multiple choice questions testing understanding of key concepts from COSO's internal control integrated framework, including the three categories of objectives, five components of internal control, and two principles of control environment. Correct answers are reliability of financial reporting, control environment, cost of internal control not exceeding benefits, segregation of duties, designing and operating controls to achieve objectives and goals, demonstrating appropriate behavior by example, monitoring and learning, establishing proper organizational culture and controls, and control activities.
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FAR EASTERN UNIVERSITY
INSTITUTE OF ACCOUNTS, BUSINESS AND FINANCE
Department of Accountancy & Internal Auditing
NAME: GONZAGA, STEPHENIE VAN M. SUBJECT : AUD 1201
SECTION : ____1___ PROF. : SOLITA R. VITUG EXERCISE ON INTERNAL CONTROL FRAMEWORK
I. MULTIPLE CHOICE. Write the letter that represents the best answer.
1. The COSO framework treats internal control as a process designed to provide reasonable assurance regarding the achievement of objectives related to A. Reliability of financial reporting B. Effectiveness and efficiency of operations C. Compliance with applicable laws and regulations D. All of the answers are correct
2. Which term best reflects the attitude and actions of the board and management regarding the significance of control within the organization? A. Control environment B. Risk assessment C. Control activities D. Monitoring
3. Internal control can provide only reasonable assurance that the organization’s objectives will be met efficiently and effectively. One factor limiting the likelihood of achieving those objectives is that A. The internal auditor’s primary responsibility is the detection of fraud. B. The cost of internal control should not exceed its benefits. C. The board is active and independent. D. Management monitors performance.
4. Which of the following is most likely to be performed in the control activities component of internal control? A. Segregation of duties B. Ongoing evaluations C. Information processing D. Assessing fraud risks
5. An organization’s directors, management, and internal auditors all have important roles in creating a proper control environment. Senior management is primarily responsible for A. Implementing and monitoring controls designed by the board of directors. B. Designing and operating a control system that provides reasonable assurance that established objectives and goals will be achieved. C. Ensuring that external and internal auditors adequately monitor the control environment. D. Establishing a proper ethical culture
6. According to COSO, which of the following is the most effective method to transmit a message of ethical behavior throughout an organization? A. Strengthening internal audit’s ability to deter and report improper behavior. B. Removing pressures to meet unrealistic targets, particularly for short-term results. C. Demonstrating appropriate behavior by example. D. Specifying the competence levels for every job in an organization and translating those levels to requisite knowledge and skills.
7. Each of the following statements is correct regarding the existence and implementation of codes of conduct except A. The codes of conduct must be in writing and displayed in public areas, such as a break room. B. Employees understand what behavior is acceptable or unacceptable and know what to do if they encounter improper behavior. C. The codes of conduct are comprehensive, addressing conflicts of interest, illegal or other improper payments, anticompetitive guidelines, and insider trading. D. The codes of conduct are periodically acknowledged by all employees.
1 8. Which of the following is not a component of the CoCo model? A. Commitment B. Capability C. Risk assessment D. Monitoring and learning
9. An organization’s directors, management, external auditors, and internal auditors all play important roles in creating a proper control environment. Senior management is primarily responsible for A. Designing and operating a control system that provides reasonable assurance that established objectives and goals will be achieved. B. Establishing a proper organizational culture and specifying a system of internal control. C. Ensuring that external and internal auditors adequately monitor the control environment. D. Implementing and monitoring controls designed by the board of directors.
10. The policies and procedures helping to ensure that management directives are executed and actions are taken to address risks to achievement of objectives describes A. Risk assessments B. Control environment C. Monitoring D. Control activities
II. ENUMERATION
1 to 3 Categories of Objectives under the COSO Internal Control Integrated Framework
1. RELIABILITY & FINANCIAL REPORTING 2. EFFECTIVENESS & EFFICIENCY OF OPERATIONS 3 COMPLIANCE WITH RULES & REGULATIONS
4 to 8 Components of COSO Internal Control Integrated Framework
4. CONTROL ENVIRONMENT 5. RISK ASSESSMENT 6. INFORMATION & COMMUNICATION 7. CONTROL ACTIVITIES 8. MONITORING ACTIVITIES
9 to 10 Give two principles of Control Environment
9. ENFORCES ACCOUNTABILITY 10. DEMONSTRATES COMMITMENT TO COMPETENCE
Note: You can write your answers here or in a half-sheet paper (lengthwise).
