Compliance and Auditing Internal Controls 1

Question 1

What are the five components of the COSO Internal Control — Integrated Framework?

Accepted Answer

Control Environment, Risk Assessment, Control Activities, Information & Communication, Monitoring

Answer

Plan, Do, Check, Act, Improve

Answer

Identify, Protect, Detect, Respond, Recover

Answer

Governance, Risk, Compliance, Audit, Reporting

Question 2

What is 'segregation of duties' (SoD) as an internal control?

Accepted Answer

Separating critical business functions among different people to prevent fraud and errors

Answer

Dividing the audit team into specialized groups

Answer

Creating separate departments for compliance and operations

Answer

Isolating sensitive data from general access

Question 3

Which type of control is designed to prevent errors or fraud from occurring in the first place?

Accepted Answer

Preventive control

Answer

Detective control

Answer

Corrective control

Answer

Compensating control

Question 4

What is the purpose of a 'compensating control' in internal control design?

Accepted Answer

To substitute for a primary control that cannot be implemented

Answer

To reward employees for good compliance behavior

Answer

To detect and correct errors after they occur

Answer

To compensate auditors for their services

Question 5

Which internal control activity involves comparing actual results to expected outcomes?

Accepted Answer

Analytical review

Answer

Authorization

Answer

Reconciliation

Answer

Physical safeguards

Question 6

What does 'tone at the top' refer to in the context of internal controls?

Accepted Answer

The ethical climate and commitment to compliance set by senior leadership

Answer

The volume of communication in the organization

Answer

The top-tier level of internal audit findings

Answer

The highest risk items in the risk register