What is Internal control framework (COSO)?
In short
Internal control is a process designed to provide reasonable assurance about achieving objectives in operations, reporting and compliance. The Committee of Sponsoring Organizations (COSO) framework divides it into five components.
Key takeaways
- The five components: control environment, risk assessment, control activities, information and communication, and monitoring activities.
- The control environment, or 'tone at the top', is the foundation for the others.
- Internal control gives reasonable, not absolute, assurance because of limits such as human error and management override.
Where it's tested
AUD: Understanding the Entity & Internal Control — study notes, a five-minute revision sheet and practice questions.
Practise: 3 questions
Question 1 of 3 · 0 answered
In a financial statement audit of a nonissuer, which of the following is required in every audit?