Multiple Choice
Which of the five components of internal controls is primarily designed to promote accountability within an organization?
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6. Internal Controls and Reporting Cash
Five Components of Internal Controls
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Join thousands of students who trust us to help them ace their exams!Watch the first videoMultiple Choice
Which of the following is a component of internal control as defined by the COSO framework?
A
Control Environment
B
Budgetary Control
C
Financial Reporting
D
Tax Compliance
Verified step by step guidance1
Understand the COSO framework: The Committee of Sponsoring Organizations of the Treadway Commission (COSO) framework defines internal control as a process designed to provide reasonable assurance regarding the achievement of objectives in operations, reporting, and compliance.
Identify the five components of internal control under the COSO framework: These components are Control Environment, Risk Assessment, Control Activities, Information and Communication, and Monitoring Activities.
Focus on the Control Environment: The Control Environment is the foundation of the COSO framework. It includes the organization's integrity, ethical values, governance structure, and commitment to competence.
Evaluate the options provided: Compare each option (Control Environment, Budgetary Control, Financial Reporting, Tax Compliance) against the COSO framework components to determine which aligns with the definition.
Conclude that 'Control Environment' is the correct answer, as it is explicitly one of the five components of internal control defined by the COSO framework.
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