What are Internal Controls?
What are internal controls?
Policies and procedures used to protect assets, ensure accuracy, and prevent fraud.
Who is mainly responsible for designing internal controls?
Management
What does COSO stand for?
Committee of Sponsoring Organizations
What is risk assessment?
Identifying and analyzing potential risks.
What is one duty organizations have regarding internal controls?
Implementing control procedures.
Why are internal controls important in business?
They help prevent fraud, ensure compliance, and improve efficiency.
Who monitors the internal controls for effectiveness?
Internal auditors
How many components are in the COSO model?
Five
Why is risk assessment important?
It helps prevent problems before they happen.
How often should organizations review their internal controls?
Regularly or periodically
Name one risk internal controls help reduce
Financial reporting errors or asset theft.
Who oversees internal controls at the highest level?
Board of Directors
Name the first COSO component.
Control Environment
True or False: Risk assessment is only done once.
False
Who should receive training on internal controls?
All employees
What is one area that internal controls help regulate?
Financial reporting or operational efficiency.
True or False: Only finance departments are responsible for internal controls.
False
What COSO component involves sharing relevant information?
Information and Communication
What’s a common risk in financial reporting?
Misstatements or fraud
What should be done when a control fails?
Investigate and correct the issue
Give an example of an internal control.
Requiring manager approval before spending company funds.
What is the role of employees in internal controls?
They follow procedures and report concerns.
What is the purpose of the Monitoring component?
To evaluate and update controls as needed.
What’s the first step in a risk assessment process?
Identifying potential risks or threats.
Why should internal controls be documented?
For transparency, compliance, and auditing.