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

Answer options:

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

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

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

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 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.

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