Multiple Choice
Banks provide important controls surrounding a company's cash. These include which of the following?
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6. Internal Controls and Reporting Cash
Five Components of Internal Controls
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Which one of the following is NOT one of the five components of internal control as defined by COSO?
A
Budgetary Control
B
Control Environment
C
Risk Assessment
D
Information and Communication
Verified step by step guidance1
Understand the context: The Committee of Sponsoring Organizations of the Treadway Commission (COSO) defines internal control as a process designed to provide reasonable assurance regarding the achievement of objectives in operations, reporting, and compliance.
Learn the five components of internal control as defined by COSO: These are Control Environment, Risk Assessment, Control Activities, Information and Communication, and Monitoring Activities.
Compare the options provided in the question with the five components of internal control: Identify which options match the COSO components and which one does not.
Recognize that 'Budgetary Control' is not one of the five components of internal control as defined by COSO. It is a financial management tool, not a COSO-defined internal control component.
Conclude that the correct answer to the question is 'Budgetary Control,' as it is not part of the COSO framework for internal control.
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