Multiple Choice
Which of the following generally would be considered good internal control of 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 internal control as defined by COSO?
A
Information and Communication
B
Risk Assessment
C
Financial Reporting
D
Control Environment
Verified step by step guidance1
Step 1: Understand the context of the question. The COSO framework (Committee of Sponsoring Organizations of the Treadway Commission) defines five components of internal control that are essential for effective governance and risk management.
Step 2: Familiarize yourself with the five components of internal control as defined by COSO. These are: Control Environment, Risk Assessment, Information and Communication, Monitoring Activities, and Control Activities.
Step 3: Compare the options provided in the question to the five components of internal control. Identify which option does not align with the COSO framework.
Step 4: Note that 'Financial Reporting' is not one of the five components of internal control defined by COSO. While financial reporting is an important aspect of organizational operations, it is not explicitly listed as a component in the COSO framework.
Step 5: Conclude that the correct answer to the question is 'Financial Reporting,' as it is not one of the five components of internal control defined by COSO.
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