Multiple Choice
Which of the following is an internal control procedure for cash disbursements?
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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 effective internal controls as defined by COSO?
A
Risk Assessment
B
Information and Communication
C
Control Environment
D
Profit Maximization
Verified step by step guidance1
Understand the COSO framework, which defines five components of effective internal controls: Control Environment, Risk Assessment, Control Activities, Information and Communication, and Monitoring Activities.
Review each of the listed options in the problem and compare them to the five components defined by COSO.
Identify that 'Risk Assessment,' 'Information and Communication,' and 'Control Environment' are indeed part of the COSO framework.
Recognize that 'Profit Maximization' is not one of the five components of effective internal controls as defined by COSO.
Conclude that the correct answer is 'Profit Maximization' because it does not align with the COSO framework's components.
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