Which of the following items is considered as an objective of the three dimensional model within the framework described in COSO ERM?
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A. B. C. D.B.
The COSO ERM (Enterprise Risk Management) frame work is a 3-dimensional model.
The dimensions and their components include: -> Strategic Objectives - includes strategic, operations, reporting, and compliance.
-> Risk Components - includes Internal Environment, Objectives settings, Event identification, Risk assessment, Risk response, Control activities, Information and communication, and monitoring.
-> Organizational Levels - include subsidiary, business unit, division, and entity-level.
The COSO ERM framework contains eight risk components: -> Internal Environment -> Objective Settings -> Event Identification -> Risk Assessment -> Risk Response -> Control Activities -> Information and Communication -> Monitoring Section 404 of the Sarbanes-Oley act specifies a three dimensional model- COSO ERM, comprised of Internal control components, Internal control objectives, and organization entities.
All the items listed are components except Financial reporting which is an internal control objective.
Incorrect Answers: A, C, D: They are the Internal control components, not the Internal control objectives.
The COSO ERM (Enterprise Risk Management) framework is a widely used framework for managing risks in an organization. The framework is based on a three-dimensional model, which consists of the following dimensions:
The risk management components: This dimension includes the various components of risk management, such as internal environment, objective setting, event identification, risk assessment, risk response, control activities, information and communication, and monitoring.
The organizational objectives: This dimension includes the various objectives that an organization has, such as strategic, operational, reporting, and compliance objectives.
The organizational units: This dimension includes the various organizational units or entities that make up an organization, such as business units, subsidiaries, and divisions.
Now, let's look at the answer options:
A. Risk assessment: Risk assessment is one of the components of risk management and is not an objective of the three-dimensional model. It is a process of identifying, analyzing, and evaluating risks to an organization's objectives.
B. Financial reporting: Financial reporting is an organizational objective and is a part of the reporting objective of an organization. It involves the preparation and presentation of financial statements and other financial reports to external stakeholders.
C. Control environment: The control environment is one of the components of risk management and is not an objective of the three-dimensional model. It refers to the overall attitude, awareness, and actions of an organization concerning the importance of control.
D. Monitoring: Monitoring is one of the components of risk management and is not an objective of the three-dimensional model. It involves ongoing monitoring of the risk management process and the internal control system.
Therefore, none of the answer options is considered as an objective of the three-dimensional model within the framework described in COSO ERM.