Question

One component of the COSO framework is “control procedures.” We discussed four general types of control procedures in class. Briefly describe (in a sentence or two) any two of these types of control procedures. I will give only part credit if you use examples rather than naming the particular categories we discussed.

Answer 1

In 1992, the Committee of Sponsoring Organizations of the Treadway Commission (COSO) developed a model for evaluating internal controls. This model has been adopted as the generally accepted framework for internal control and is widely recognized as the definitive standard against which organizations measure the effectiveness of their systems of internal control.

1. Control Environment

• Exercise integrity and ethical values.
• Make a commitment to competence.
• Use the board of directors and audit committee.
• Facilitate management’s philosophy and operating style.
• Create organizational structure.
• Issue assignment of authority and responsibility.
• Utilize human resources policies and procedures.

1. Control Activities

• Follow policies and procedures.
• Improve security (application and network).
• Conduct application change management.
• Plan business continuity/backups.
• Perform outsourcing.