Page 234 - COSO Guidance Book

Summary

This chapter addressed the key concepts related to the risk assessment component of internal control
contained in the COSO’s 2013 Internal Control — Integrated Framework. It also provided material to obtain
an understanding of the related principles and points of focus.

To assess risk, objectives must be stated clearly. Internal controls are designed based on a risk
assessment, risk tolerance, and the relative importance of the objective.

Examples illustrated the risk assessment component of internal control’s principles and points of focus.

Applicable professional standards that address risk assessment (AU-C sections 240 and 315) were
covered.

The incentives, pressures, and opportunity for financial reporting fraud factors contained in professional
auditing standards cited in AU-C section 240 were provided in exhibit 4-1.

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