Which of the following is a key component of strong internal control environment?
A.
RMIS
B.
Segregation of duties
C.
Manual control
D.
Automated tools
Explanation:
Segregation of duties (SOD) is a key component to maintaining a strong internal control
environment because it reduces the risk of fraudulent transactions. When duties for a business
process or transaction are segregated it becomes more difficult for fraudulent activity to occur
because it would involve collusion among several employees.
Answer D is incorrect. It is not directly related in maintaining strong internal control environment.The automated tools are typically used to address SOD and also to provide theenterprise with
reporting functionality on SOD violations (i.e., detective controls) and to put in place preventive
controls.
Answer C is incorrect. Manual controls usually not form strong internal control environment. By not
automating SOD controls, there is, potentially, the issue of these controls becoming a barrier in
serving the customer. As manual authorizations are often time consuming and require another
step in any business process, this takes time away from serving the customer.
Automated compliance solutions aim to provide enterprises with timely and efficient internal
controls that do not disrupt their normal business process.
Answer A is incorrect. An RMIS can be a very effective tool in monitoring all risk factors that
impact the enterprise. The danger is that many important classes of risk may be omitted from
consideration by the system. hence it doesn’t ensure strong internal control environment.