Multiple Choice
Which of the following is an example of a preventive control in a company?
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6. Internal Controls and Reporting Cash
Five Components of Internal Controls
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Which of the following is NOT one of the five components of internal control as defined by the COSO framework?
A
Control Environment
B
Financial Reporting
C
Information and Communication
D
Risk Assessment
Verified step by step guidance1
Understand the COSO framework: The COSO (Committee of Sponsoring Organizations of the Treadway Commission) framework defines five components of internal control that are essential for achieving effective internal control within an organization.
Identify the five components of internal control: The five components are Control Environment, Risk Assessment, Information and Communication, Monitoring Activities, and Control Activities.
Compare the options provided in the question with the five components of internal control: Review each option to determine whether it matches one of the five components defined by COSO.
Recognize that 'Financial Reporting' is not one of the five components of internal control: While financial reporting is important in accounting, it is not explicitly listed as a component in the COSO framework.
Conclude that the correct answer is 'Financial Reporting' because it does not align with the five components of internal control as defined by COSO.
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