Multiple Choice
The impact of technology on internal controls includes:
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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 a properly designed internal control system, as defined by the COSO framework?
A
Financial Reporting
B
Risk Assessment
C
Control Environment
D
Information and Communication
Verified step by step guidance1
Understand the COSO framework: The COSO framework outlines five components of a properly designed internal control system. These components are essential for achieving effective internal controls within an organization.
List the five components of the COSO framework: The components are (1) Control Environment, (2) Risk Assessment, (3) Control Activities, (4) Information and Communication, and (5) Monitoring Activities.
Compare the options provided in the question with the COSO framework components: The options are Financial Reporting, Risk Assessment, Control Environment, and Information and Communication.
Identify the option that is NOT part of the COSO framework: Financial Reporting is not one of the five components of the COSO framework. It is an outcome or objective of internal controls, not a component.
Conclude that the correct answer is Financial Reporting, as it does not belong to the five components defined by the COSO framework.
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