List and explain three of the five interrelated components of the internal control framework established by The Committee of Sponsoring Organizations of the Treadway Commission (COSO) that serve as the standards for Sarbanes-Oxley compliance.
What will be an ideal response?
Any three of the five components listed below should be included in the answer:
1. Control Environment - The integrity and ethical values of the company, including its code of conduct, involvement of the board of directors, and other actions that set the tone
of the organization.
2. Risk Assessment - Management's process of identifying potential risks that could result in misstated financial statements and developing actions to address those risks.
3. Control Activities - These are the activities usually thought of as the "internal controls." They include such things as segregation of duties, account reconciliations, and information
processing controls designed to safeguard assets and enable an organization to prepare reliable financial statements in a timely manner.
4. Information and Communication - The internal and external reporting process, including
an assessment of the technology environment.
5. Monitoring - Assessing the quality of a company's internal control over time and taking
actions as necessary to ensure it continues to address the risks of the organization.
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What will be an ideal response?