Question

which of the following statements is true of the committee of sponsoring organizations? select one: a. it describes control as encompassing those elements of an organization that, taken together, support people in the achievement of an organizations objectives. b. it improves financial reporting through a combination of controls and governance standards called the external control-integrated framework. c. it is an external mechanism that seeks to ensure ethical corporate governance. d. it replaces the sarbanes-oxley act to ensure ethical corporate governance.

Explanation:

• Option a: The Committee of Sponsoring Organizations (COSO) defines internal control as a process, effected by an entity's board of directors, management, and other personnel, designed to provide reasonable assurance regarding the achievement of objectives in operations, reporting, and compliance. The description in option a aligns with this as it talks about elements supporting people in achieving organizational objectives.
• Option b: COSO's framework is the Internal Control - Integrated Framework (not External Control - Integrated Framework), so this is incorrect.
• Option c: COSO is not an external mechanism; it is a group of organizations that developed internal control and enterprise risk management frameworks, so this is incorrect.
• Option d: COSO does not replace the Sarbanes - Oxley Act. The Sarbanes - Oxley Act is a law, and COSO provides a framework for implementing internal controls related to it, so this is incorrect.

Answer:

a. It describes control as encompassing those elements of an organization that, taken together, support people in the achievement of an organization's objectives.