Internal Control Basics
What are the policies and procedures an organization uses to help achieve its objectives?
What are internal controls?
Who is mainly responsible for putting internal controls in place and making sure they work?
Who is management?
How many main parts make up the COSO internal control framework?
What are five?
What is the process of figuring out what could go wrong and how it could affect an organization?
What is risk assessment?
What should an organization create so employees know the correct way to complete tasks and approve payments?
What are policies and procedures?
Name one major purpose of internal controls.
What is preventing fraud, reducing errors, protecting assets, or improving accountability?
Who oversees the organization and holds management accountable for internal controls?
Who is the board of directors or governing body?
Which COSO component focuses on an organization's values, ethics, and leadership?
What is the control enviornment?
What are two things an organization should consider when looking at a possible risk?
What are how likely it is to happen and how serious the consequences could be?
What is it called when different employees handle different parts of a financial transaction to reduce the chance of fraud or mistakes?
What is separation of duties?
What are the three main areas internal controls help organizations with: daily operations, sharing accurate information, and following rules?
What are operations, reporting, and compliance?
What should employees do to help an organization maintain good internal controls?
What is follow procedures and report any problems they notice?
Which COSO component includes things like getting approval for purchases and separating job responsibilities?
What are control activities?
Why should an organization identify risks before deciding what controls it needs?
What is to understand what could go wrong and choose the right ways to prevent or reduce problems?
What should an organization do regularly to make sure its internal controls are still working?
What is monitor and review its controls?
Do internal controls guarantee that an organization will never make a mistake or experience fraud?
What is no, they provide reasonable assurance but cannot prevent every problem?
Why is it important for employees to know exactly what their responsibilities are?
What is to make sure tasks are completed correctly and people are held accountable?
Which two COSO components focus on sharing important information and checking that controls are working?
What are information and communication and monitoring activities?
One employee can approve payments and record them without anyone checking their work. What is one risk this creates?
What is the risk of fraud or mistakes going unnoticed?
Why is it important for an organization to keep records of its transactions and internal control procedures?
What is to keep information accurate, show accountability, and make it easier to review decisions?
What are two examples of problems internal controls can help an organization catch or prevent?
What are incorrect financial records and unauthorized payments?
Why can't an organization leave all its internal controls up to the accounting department?
What is because everyone in the organization has a role in following procedures and protecting resources?
Can you name all five components of the COSO internal control framework?
What are control environment, risk assessment, control activities, information and communication, and monitoring activities?
Why should an organization review its risks when it starts a new program or changes its computer systems?
What is because changes can create new risks that the organization's current controls may not cover?
An organization discovers that its current procedures are not protecting it from a major risk. What should management do next?
What is improve the controls, put the changes into practice, and check whether they work?