Page 177 - COSO Guidance

Exhibit 1-1: Factors to consider when obtaining an understanding of the entity
and its environment (continued)

Appendix B, “Internal Control Components,” of AU-C section 315 includes information related
to each of the following (which are relevant to understanding the entity and its environment):
2
 Understand the following five components of internal control:
– Control environment
– Entity’s risk assessment procedures
– Information and communication systems
– Control activities
– Monitoring of controls

Knowledge check

2. Which group has long been recognized as being responsible for developing a system of internal
control over financial reporting?

a. External auditors.
b. Government regulators.
c. Financial management.
d. Audit committee.

2
When understanding the five components of internal control as outlined in GAAS, the 17 principles contained in
the 2013 COSO Internal Control — Integrated Framework are used.

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