IT Service Management and Systems Audit
Among the basic components of internal control, which of the following describes the control environment appropriately?
- AIdentifying, analyzing and evaluating risks that hinder the achievement of the organization's objectives, and choosing responses to them
- BThe component that sets the tone of the organization and is the foundation of all the other basic components, including management's integrity and ethical values, organizational structure, and assignment of authority and responsibility
- CPolicies and procedures, such as approvals, reconciliations and segregation of duties, established so that management's orders and instructions are properly carried out
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Answer: B. The component that sets the tone of the organization and is the foundation of all the other basic components, including management's integrity and ethical values, organizational structure, and assignment of authority and responsibility
In the Japanese framework of internal control, there are six basic components: the control environment, risk evaluation and response, control activities, information and communication, monitoring, and response to IT (information technology). The control environment sets the tone of the organization, influences the control consciousness of the people in it, and is the foundation of the other basic components. It includes management's integrity and ethical values, management policies, the functioning of the board of directors and corporate auditors, organizational structure, assignment of authority and responsibility, and personnel policies.
- A. This describes risk evaluation and response.
- B. Correct. It is the component that sets the tone of the organization and forms the foundation of the other basic components.
- C. This describes control activities.
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