Question

Fill in the blank

1. The foundation of the internal control system is the control _____________ - the collection of environmental factors that influence the effectiveness of control procedures.

2. Strategic risk assessment is designed to identify, analyze, and manage possible threats to the organization's success concerning ____________________ forces such as competitors, customers, suppliers, and PEST factors.

3. Business process risk assessment is designed to identify, analyze, and manage possible threats to the organization's success concerning ____________________ forces such as resource allocations.

Answer 1

1. Environment.

The foundation of internal controls is the tone of the business at management level. Integrity and ethical values, management philosophy and operating style, and other such factors fall under the control environment.

2. External

Competitors, customers, suppliers, and PEST factors are considered as external factors infuencing a business and thus requiring risk assessment

3. Internal

Resource allocation is considered as an internal factor which requires risk assessment