CPA Business Environment and Concepts (BEC) : COSO Framework
Study concepts, example questions & explanations for CPA Business Environment and Concepts (BEC)
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Example Questions
Example Question #1 : Corporate Governance
Per the COSO ICIF, the main purpose of monitoring internal controls is to confirm that the internal control system can adequately address changes in:
Monitoring
Control Environment
Risk Assessment
Information and communication
Monitoring
Risks constantly change in terms of likelihood and severity. Internal controls should be created and upheld to address changes in risks.
Example Question #2 : Corporate Governance
A company's management is experiencing a lack of segregation of duties within its application environment as its programmers have access to both development and production. The programmers have the ability to implement changes in code in production without monitoring or quality assurance. This is a deficiency in which area?
Management override
Computer operations
Data integrity
Change control
Change control
Programmers who have access to both instructions and live data can undermine management's control of data and their ability to verify that all changes have been performed in a manner consistent with their instructions.
Example Question #3 : Corporate Governance
Of the following positions, which best describes the nature of a company's Board of Directors in relation to the company?
Fiduciary
Agent
Representative
Executive
Fiduciary
A company's board of directors has a fiduciary duty to act on behalf of and in the best interest of a corporation.
Example Question #4 : Corporate Governance
According to COSO, which of the following is included in the assess and report phase of an effective approach to monitoring internal controls?
Tone at the top
Prioritize risks
Identify controls
Prioritize findings
Prioritize findings
Findings result from monitoring internal controls.
Example Question #5 : Corporate Governance
The Treadway Commission was established by:
The Treadway Foundation
SOX 2002
The SEC
Private sponsoring organizations
Private sponsoring organizations
The COSO was an independent private sector initiative.
Example Question #6 : Corporate Governance
Of the following components, which would not be included in Risk Assessment activities?
Consider the potential for fraud
Identify and assess changes
These are all included
Specify objectives
These are all included
All of these components are required when conducting Risk Assessment under the COSO framework.
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