Which of the following is an example of following COSO Principle 2: The board of directors demonstrates independence from management and exercises oversight over the development an... Which of the following is an example of following COSO Principle 2: The board of directors demonstrates independence from management and exercises oversight over the development and performance of internal control?
Understand the Problem
The question is asking to identify which of the following options exemplifies COSO Principle 2, which states that the board of directors should demonstrate independence from management and oversee the development and performance of internal control.
Answer
The board of directors can force segregation of reporting responsibilities in a company.
The board of directors can force segregation of reporting responsibilities in a company.
Answer for screen readers
The board of directors can force segregation of reporting responsibilities in a company.
More Information
COSO Principle 2 emphasizes the board's independence from management. Segregation of reporting responsibilities ensures that no single individual has complete control over financial reporting, reducing the risk of fraud or error. The board's ability to enforce this segregation demonstrates its oversight and independence.
Tips
A common mistake is to confuse general internal control practices with the specific role of the board of directors in overseeing those controls. Focus on options that highlight the board's direct action and independence from management.
Sources
- COSO Principles + SOC 2: Trust Services Criteria Alignment - linfordco.com
- Summary of COSO Internal Control Framework Components 2013 - sunyopt.edu
- Fundamentals of the COSO Framework | AuditBoard - auditboard.com
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