An Entity's Internal Controls Consist of Five Interrelated Components (Plus

question 68

Short Answer

An entity's internal controls consist of five interrelated components (plus an overriding concern with fraud prevention and detection):A:control environment
B:risk assessment
C:information and communication
D:control activities
E:monitoring
REQUIRED: Using the appropriate letter, identify the component to which each of the following control activities or considerations pertains.
1.Performance reviews
2.Commitment to competence
3.System should provide a complete audit or transaction trail
4.Integrity and ethical values
5.Access controls
6.Changes in operating environment
7.Board of directors and audit committee
8.Segregation of duties
9.Organizational structure
10.Reporting exceptions for follow-up
11.Management's philosophy and operating style
12.Internal audit function
13.Physical controls
14.New accounting pronouncements
15.Assignment of authority and responsibility
16.Human resource policies and procedures
17.Organization and operation control
18.Input controls
19.Data and procedural controls
20.Processing controls

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Definitions:

Equivocality

The existence of multiple and potentially conflicting interpretations or meanings within a communication context.

Predictable Context

An environment or situation in which outcomes can be anticipated based on known variables, past experiences, and established patterns.

Suprasystem

A larger system that encompasses one or more sub-systems, highlighting the hierarchical and relational aspects of complex systems.

Subsystem

A component of a larger system that has its specific role and functions within the overall structure.