[nalratoss]

An organization’s directors, management, and internal auditors all have important roles in
creating a proper control environment. Senior management is primarily responsible for

A. Establishing a proper ethical culture
B. Designing and operating a control system that provides reasonable assurance that established objectives and goals will be achieved
C. Ensuring that external and internal auditors adequately monitor the control environment
D. Implementing and monitoring controls designed by the board of directors

I don’t get it why is the answer not B? I think both A and B are answers. In my textbook Gleim, under responsibility of senior management, it says:
a) sets the tone at the top and has primary responsibility for establishing proper ethical culture
b) sets objectives
c) has overall responsibility for designing, implementing and operating an effective system of internal control.

Isn’t c) the same as answer B?

FAR-80

AUD-77

REG-75

BEC-82

 

I'm done done!

[rencpa]

Not sure I am correct, however this is my way to answer this question:

There are 3 important “parties” in Control Environment: Management, BoD, and IA (they have different responsibilities). The question asks about Management only! With that said, I would eliminate “c” right away. Management does not monitor EXTERNAL auditors! (External auditors report directly to the Audit Committee). Then I will eliminate “d” because BoD are people who oversight IC and Management is responsible for establishing and maintaining IC (Management does not monitor).

In order to drop “B”, I would read the question again and I will eliminate “b” because the question asks for “PRIMARY” responsibility in Control Environment. From my understanding “a proper ethical culture” is the main/primary responsibility.

I think the key to this question is to focus on the correct component of IC and the correct parties.
Control Environment = tone at the top = ethics ==> the most important point

Honestly, I would pic up “a” from the beginning, but I tried to read the rest of the answers.

Hope someone else is going to read this and correct me. Mind telling which one is the answer? 🙂

"Self-trust is the first secret of success" -- Ralph Waldo Emerson

[rencpa]

BTW, just to read your note from your Gleim book under “a”…”PRIMARY responsibility for…” read the rest of the sentence (“establishing”) what? “proper ethical culture” Here is your answer! Hope

Anyway, I am super tired. Need some sleep.

"Self-trust is the first secret of success" -- Ralph Waldo Emerson

[fblessed777]

I would go for B. If you see closely the last sentence, the focus is proper “control environment” responsibility of senior management, esp. CEO and CFO. According to SOX law, their primary responsibility is establishing and maintaining (operating) of internal control system.

[Superdude3000]

While I can't speak for Gleim, Roger always stressed ‘tone at the top' as being the most critical factor of the control environment and that it is top management's duty for making sure they implement a strong ethical tone. Based on my studies I would pick A every time.

REG - 92 (1/17)

BEC - 82 (2/17)

AUD - 89 (5/17)

FAR - 94 (9/17)

Rogers Elite + Becker mcqs/sims for all 4 exams

WA State Ethics Exam - 83, 83, 90 (9/17)

AICPA Ethics Exam - 95 (9/17)

1-year of work - complete (11/18)

Licensed WA State CPA

[Author]

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