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    PracticeCPA®CPA AUD Practice Exam 4Question 13
    Hard1 markMultiple Choice
    Area II: Risk AssessmentAUDCOSOInternal Control

    CPA · Question 13 · Area II: Risk Assessment

    In the context of the COSO Internal Control—Integrated Framework, which of the following principles is associated with the 'Control Environment' component?

    Answer options:

    A.

    The organization selects and develops control activities that contribute to the mitigation of risks.

    B.

    The organization identifies and assesses changes that could significantly impact the system of internal control.

    C.

    The organization demonstrates a commitment to attract, develop, and retain competent individuals.

    D.

    The organization obtains or generates and uses relevant, quality information to support the functioning of internal control.

    How to approach this question

    Map the 17 COSO principles to the 5 components (CRIME). Control Environment deals with Tone at the Top, Ethics, Structure, and Competence.

    Full Answer

    C.The organization demonstrates a commitment to attract, develop, and retain competent individuals.✓ Correct
    The organization demonstrates a commitment to attract, develop, and retain competent individuals.
    The Control Environment includes principles related to integrity/ethics, board independence, structures/reporting lines, commitment to competence (hiring/retaining), and accountability.

    Common mistakes

    Confusing Control Environment with Control Activities.
    Question 12All questionsQuestion 14

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