The situations below relate to the corporate governance structure within various
ID: 2585291 • Letter: T
Question
The situations below relate to the corporate governance structure within various companies. The option provided present principles related to the control environment of the COSO Framework. For each situation, select the appropriate principle.
Situation:
a. The board of directors demonstrates independence from management and exercies oversight of internal control.
b. The organization holds individual accountable for their internal control responsibilities
c. The organization demonstrates a commitment to integrity and ethical values
d.Management establishes reporting and structures line
e. The management demonstrates a commitment to attract, develop, and retain competent individuals
The situations below relate to the corporate governance structure within various companies. The option provided present principles related to the control environment of the COSO Framework. For each situation, select the appropriate principle.
Situation:
Rock Chalk Corp conducts scheduled audits to determine whether employees are receiving and understanding the board-approved standards of conduct when they are first hired and as part of ongoing communications. This helps to determine if there are any instances of noncompliance and to use those findings to assess and correct any deficiencies in the organization's new-hire onboarding process.a. The board of directors demonstrates independence from management and exercies oversight of internal control.
b. The organization holds individual accountable for their internal control responsibilities
c. The organization demonstrates a commitment to integrity and ethical values
d.Management establishes reporting and structures line
e. The management demonstrates a commitment to attract, develop, and retain competent individuals
Explanation / Answer
Solution:-
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Sr. No. Appropriate Principle Explanation a. Principle 2 Functioning of the board of directors is very important in providing the right attitude toward control because they help set the right tone at the top Audit committee. b. Principle 5 The organization holds individuals accountable for their internal control responsibilities in the pursuit of objectives. c. Principle 1 Management integrity and a commitment to doing the right thing, can have a significant effect on how others in the organization handle financial transactions.When they know ethical standards and know they will be enforced, less likelihood employees will engage in dishonest or illegal activities. d. Principle 3 Key is to have the organization structure match the business environment
Assigning authority and responsibility in a clear manner is important because when they are unclear employees may not take their responsibilities seriously or create error by overstepping. e. Principle 4 Commitment to competence can be very significant in setting the proper tone
Emphasize hiring the right people.
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