Multiple Choice
Which type of internal control framework is considered fairly rigid and requires that specific controls be implemented?
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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
Risk Assessment
B
Financial Reporting Standards
C
Information and Communication
D
Control Environment
Verified step by step guidance1
Understand the COSO framework: The Committee of Sponsoring Organizations of the Treadway Commission (COSO) developed a framework for internal control that includes five key components. These components are essential for effective internal control systems.
Identify the five components of internal control: The COSO framework defines the five components as Control Environment, Risk Assessment, Control Activities, Information and Communication, and Monitoring Activities.
Compare the options provided in the question to the five components of the COSO framework: Review each option to determine whether it matches one of the five components.
Recognize that 'Financial Reporting Standards' is not one of the five components: While financial reporting standards are important in accounting, they are not part of the COSO framework's internal control components.
Conclude that the correct answer is 'Financial Reporting Standards' because it does not belong to the COSO framework's defined components of internal control.
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