Components of enterprise risk management (ERM) are integrated with the management process. Which of the following correctly states four of the eight components of ERM according to COSO's framework?
Event identification, risk assessment, control activities, and objective setting.
Internal environment, risk responses, monitoring, and risk minimization.
External environment, information and communication, monitoring, and event identification.
Objective setting, response to opportunities, risk assessment, and control activities.
Which of the following represents the complete set of internal control components according to COSO framework:
Operations, Reporting, Risk assessment, Control activities, and Monitoring activities.
Reporting, Control environment, Risk assessment, Control activities, and Monitoring activities.
Operations, Compliance, Risk assessment, Control activities, and Monitoring activities.
Control environment, Risk assessment, Control activities, Information & Communication, and Monitoring activities.
The following are facts about a subsidiary?
1.The subsidiary has been in business for several years and enjoyed good profit margins although the general economy was in a recession, which affected competitors.
The working capital ratio has declined from a healthy 3:1 to 0.9:1
2.Turnover for the last several years has included three controllers, two supervisors of accounts receivable, four payables supervisors, and numerous staff in other financial positions.
3.Purchasing policy requires three bids. However, the supervisor of purchasing at the subsidiary has instituted a policy of sole-source procurement to reduce the number of suppliers.
4.When conducting a financial audit of the subsidiary, the internal auditor should?
Most likely not detect 1.,2., or 3
Ignore 2. Since the economy had a downturn during this period.
Consider 3. To be normal turnover, but be concerned about 2. And 4. As warning signals of fraud.
Consider 1.,2.,3., and 4. As warning signals of fraud.