Question

According to COSO, a system of internal controls is designed to provide reasonable assurance about the achievement of entity objectives in which of the following categories?a. Accuracy of internal and external financial and non-financial reportingb. Reliability, timeliness and transparency of internal and external financial and non-financial reportingc. Effectiveness and efficiency of operationsd. Compliance with applicable laws and regulationse. Maximization of management compensation

Answer 1

Answer:

The correct answer is: b, c and d.

Explanation:

Internal controls are are policies or processes put in place by the management arm of a company to ensure that the goals set by the firm are achieved both in the long term and short-term. These processes ensure safe custody of assets, reliability in financial information provided or used by the firm, compliance with regulations as well as  effectiveness and efficiency in the day to day operations. With this in mind, maximisation of management compensation is not a goal of internal controls. According to COSO, there are 3 main goals of internal controls: to ensure effectiveness and efficiency of operations, reliability of financial reporting and compliance with laws and regulations.