Are the policies and procedures that help ensure that management are carried out?
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Internal control is broadly defined as a process, affected by an entity's board of trustees, management, and other personnel, designed to provide reasonable assurance regarding the achievement of objectives in the following categories: Show
Internal control consists of five interrelated components:Control EnvironmentThe control environment sets the tone of an organization, influencing the control consciousness of its people. It is the foundation for all other components of internal control, providing discipline and structure. Control environment factors include the integrity, ethical values and competence of the entity's people; management's philosophy and operating style; the way management assigns authority and responsibility, and organizes and develops its people; and the attention and direction provided by the board of directors. Risk AssessmentEvery entity faces a variety of risks from external and internal sources that must be assessed. A precondition to risk assessment is establishment of objectives, linked at different levels and internally consistent. Risk assessment is the identification and analysis of relevant risks to achievement of the objectives, forming a basis for determining how the risks should be managed. Because economic, industry, regulatory and operating conditions will continue to change, mechanisms are needed to identify and deal with the special risks associated with change. Control ActivitiesControl activities are the policies and procedures that help ensure management directives are carried out. They help ensure that necessary actions are taken to address risks to achievement of the entity's objectives. Control activities occur throughout the organization, at all levels and in all functions. They include a range of activities as diverse as approvals, authorizations, verifications, reconciliations, reviews of operating performance, security of assets and segregation of duties. Information and CommunicationPertinent information must be identified, captured and communicated in a form and timeframe that enable people to carry out their responsibilities. Information systems produce reports, containing operational, financial and compliance-related information, that make it possible to run and control the business. They deal not only with internally generated data, but also information about external events, activities and conditions necessary to informed business decision-making and external reporting. Effective communication also must occur in a broader sense, flowing down, across and up the organization. All personnel must receive a clear message from top management that control responsibilities must be taken seriously. They must understand their own role in the internal control system, as well as how individual activities relate to the work of others. They must have a means of communicating significant information upstream. There also needs to be effective communication with external parties, such as customers, suppliers, regulators and shareholders. MonitoringInternal control systems need to be monitored-a process that assesses the quality of the system's performance over time. This is accomplished through ongoing monitoring activities, separate evaluations or a combination of the two. Ongoing monitoring occurs in the course of operations. It includes regular management and supervisory activities, and other actions personnel take in performing their duties. The scope and frequency of separate evaluations will depend primarily on an assessment of risks and the effectiveness of ongoing monitoring procedures. Internal control deficiencies should be reported upstream, with serious matters reported to top management and the board. COSO Internal Control – Integrated Framework Question: 43The policies and procedures helping to ensure that management directives are executed and actionsare taken to address risks to achievement of objectives arebestdescribed asA. Risk assessments.B. Control environments.C. Control activities.Answer (C) iscorrectThe COSO model for internal control describes control activities as the policies and procedureshelping to ensure that management directives are executed and actions are taken to address risks toachievement of objectives.D. Monitoring activities.. Question: 44An organization’s directors, management, and internal auditors all have important roles in creatinga proper control environment. Senior management is primarily responsible for. Get answer to your question and much more What is management's responsibility with respect to the conduct of an audit?Management is responsible for adopting sound accounting policies and for establishing and maintaining internal control that will, among other things, initiate, record, process, and report transactions (as well as events and conditions) consistent with management's assertions embodied in the financial statements.
What is management's responsibility as far as financial reporting is concerned?Management is responsible for the integrity and objectivity of the information in these financial statements. Some of the information in the financial statements is based on management's best estimates and judgment and gives due consideration to materiality.
What is the management responsibilities of having effective internal control?In order to maintain effective internal controls, management should: Maintain adequate policies and procedures; Communicate these policies and procedures; and. Monitor compliance with policies and practices.
What management assertions are internal controls designed to help ensure?Internal control is intended to provide absolute assurance that an organization will achieve its objective of reliable reporting.
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