1. According to the Committee of Sponsoring Organizations (COSO) of the Treadway Commission, which of the following components of enterprise risk  management addresses an entity's assignment of authority and responsibility?

a.Internal environment.

b.Control activities.

c.Monitoring.

d.Information and communication.

答案：A

Explanation

Choice "a" is correct. The internal environment component of the enterprise risk management (ERM) framework includes foundational elements such as organizational structure, assignment of authority and responsibility, integrity and ethical values, risk management philosophy, commitment to competence and human resource standards, and similar issues that influence the tone of the organization.

Choice "b" is incorrect. The control activities component of the ERM framework includes key elements that relate to the policies and procedures that ensure appropriate responses to identified risks, not to the assignment of authority and responsibility.

Choice "d" is incorrect. The information and communication component of the ERM framework includes key elements that relate to the identification, capture and communication of information, not to the assignment of authority and responsibility.

Choice "c" is incorrect. The monitoring component of the enterprise risk management framework includes key elements that relate to the ongoing management activities or separate evaluations of the ERM approach adopted by the entity, not to the assignment of authority and responsibility.

2. According to the Committee of Sponsoring Organizations (COSO) of the Treadway Commission, which of the following components of enterprise risk management addresses an entity's reporting deficiencies?

a.Control activities.

b.Internal environment.

c.Event identification.

d.Monitoring.

答案：D

Explanation

Choice "d" is correct. The monitoring component of the enterprise risk management (ERM) framework includes key elements that relate to the ongoing management activities or separate evaluations of the ERM approach adopted by the entity, including addressing reporting deficiencies.

Choice "b" is incorrect. The internal environment component of the ERM framework includes key elements such as organizational structure, assignment of authority and responsibility, integrity and ethical values, risk management philosophy, commitment to competence and human resource standards and similar issues that influence the tone of the organization, not reporting deficiencies.

Choice "c" is incorrect. The event identification component of the ERM framework include key elements such as identifying the relevant events that may impact an organization and then determining whether the characteristics of the events are positive (opportunities) or negative (risks), not reporting deficiencies.

Choice "a" is incorrect. The control activities component of the ERM framework includes key elements that relate to the policies and procedures that ensure appropriate responses to identified risks including types of control activities and controls over information systems, not to reporting deficiencies.

3. A company that retains a CPA with the appropriate knowledge, skills and abilities to prepare timely and effective financial reporting is applying the ideas from which principle of effective internal control over financial reporting?

a.Accountability.

b.Management philosophy and operating style.

c.Integrity and ethical values.

d.Financial reporting competencies.

答案：D

Explanation

Choice "d" is correct. The financial reporting competencies principle of the control environment component of internal control integrated framework suggests stronger controls and encourages the company to retain qualified personnel to handle financial reporting.

Choice "c" is incorrect. The integrity and ethical values principle of the control environment component of internal control integrated framework suggests stronger controls with high standards of ethical conduct for top management, but does not address retention of qualified personnel to handle financial reporting.

Choice "b" is incorrect. The management philosophy and operating style principle of the control environment component of internal control integrated framework suggests strong controls and encourages management's attitudes to be congruent with strong financial controls, but does not address retention of qualified personnel to handle financial reporting.

Choice "a" is incorrect. The accountability principle of the control environment component of internal control integrated framework suggests strong controls and encourages management to hold individuals accountable for their internal control responsibilities, but does not address retention of qualified personnel to handle financial reporting.

4. The Sarbanes-Oxley Act of 2002 was enacted in response to corporate scandals that largely centered on the quality of corporate financial disclosure and highlighted the inadequate oversight of management, auditors and the Board of Directors. The Sarbanes-Oxley Act addresses the problems related to inadequate board oversight by requiring public companies to have an:

a.Internal auditor.

b.Independent Board of Directors.

c.Audit committee.

d.Annual audit for all issuers.

答案：C

Explanation

Choice "c" is correct. Public companies are required to establish an audit committee that is directly responsible for the appointment, compensation and oversight of the work of the public accounting firm employed by that public company. The separation of audit supervision from the Board of Directors addresses the problem of inadequate board oversight.

Choice "d" is incorrect. An annual audit provides meaningful information about financial reporting but it does not address the issue of board oversight.

Choice "b" is incorrect. The independence of the Board of Directors may provide some assurance about the objectivity of the board but does not address the issue of board oversight.

Choice "a" is incorrect. An internal audit function improves the control environment but it does not engage the Board of Directors in oversight.

5. The primary benefit of having a financial expert on a company's audit committee is:

a.The financial expert certifies compliance with SEC requirements and thereby reduces audit fees.

b.The expert designation conveys a higher level of due diligence on the expert and shields audit committee members and the corporation from most liabilities.

c.The enhanced level of financial sophistication of the financial expert can serve as a resource for the audit committee.

d.The financial expert checks the auditor's work and verifies the appropriateness of the audit opinion.

答案：C

Explanation

Choice "c" is correct. The benefits of a financial expert on the audit committee relate to the expertise that the board can bring to its oversight function.

Choice "d" is incorrect. The audit committee provides oversight of the annual audit; however, the audit committee and its financial expert do not verify the auditor's work.

Choice "b" is incorrect. The term "expert" within the context of the Sarbanes-Oxley Act does not convey the same requirements as SEC regulations and does not convey either a higher level of due diligence or provide insulation to other board members. The Act is silent as to the meaning of expert outside of the qualifications to be deemed an expert.

Choice "a" is incorrect. The financial expert does not certify compliance with SEC regulations.