Internal Controls Basics
What are the primary purposes of internal controls in an organization?
What is to protect assets, ensure accurate financial reporting, and comply with laws and regulations.
What does COSO stand for?
What is the Committee of Sponsoring Organizations of the Treadway Commission.
Why is risk assessment considered essential within an internal control framework?
What is it helps identify and address threats to organizational objectives.
How does internal control strength relate to a company’s ESG rating, as discussed by Koo & Ki (2020)?
What is companies with stronger internal controls tend to score higher on ESG ratings.
Name one of the key responsibilities an organization has in maintaining effective internal controls.
What is documentation, employee training, or ongoing compliance verification.
What key areas do strong internal controls aim to reduce?
What are errors, fraud, and operational inefficiencies.
What is the first component of the COSO internal control model that sets the foundation for all controls?
What is the Control Environment.
According to COSO, what is the role of risk assessment within an organization?
What is identifying and evaluating risks that might affect achieving objectives.
What do experienced internal control teams help reduce, according to Koo & Ki (2020)?
What are internal control weaknesses.
What does “compliance verification” involve in the context of internal controls?
What is regularly assessing control effectiveness to address new or evolving risks.
Who is primarily responsible for implementing and overseeing internal controls in a company?
Who are management and the board of directors.
In the COSO model, which component focuses on identifying and analyzing risks?
What is Risk Assessment.
How does the study by Gao et al. (2023) suggest companies respond to internal control weaknesses in hiring?
What is by increasing demand for skilled accountants in risk management and compliance.
How can investing in experienced internal control personnel impact a company’s sustainability profile?
What is it helps align financial integrity with broader sustainability goals.
Why is employee training important for maintaining internal controls?
What is to ensure staff understands their roles in maintaining compliance and reducing risks.
What consequence might an organization face if its internal controls are inadequate?
What are financial misstatements, regulatory penalties, or reputational damage.
What does the Control Activities component of the COSO framework entail?
What is implementing policies and procedures to mitigate identified risks.
What kind of professionals are often sought after when companies identify internal control weaknesses?
Who are accountants skilled in auditing, compliance, and risk assessment.
What connection did Koo & Ki (2020) find between internal controls and a company's ESG performance?
What is strong internal controls contribute to better ESG performance and fewer regulatory risks.
What is a crucial aspect of establishing internal controls that helps ensure their effectiveness over time?
What is regular monitoring and assessment of the controls.
According to Gao et al. (2023), what do firms with internal control weaknesses often seek in new hires?
What are skilled accountants with expertise in risk management and financial reporting.
Which component of the COSO model ensures timely and reliable communication within an organization?
What is Information and Communication.
According to Feng et al. (2015), what operational area is negatively affected by weak internal controls?
What is inventory management.
What type of rating measures a company’s sustainability and ethical impact, which is influenced by internal controls?
What is an ESG rating.
When organizations establish internal controls, what must they document to ensure transparency and accountability?
What is the policies and procedures related to their internal control systems.