The following questions relate to Controls.

1. Companies subject to Sarbanes Oxley are required to implement a recognized framework of internal control. U.S. based companies have adopted the COSO framework. Please explain what is meant by a framework of internal controls. How does it help the organization achieve its objectives?
2. The adequacy of internal controls is said to be a function of the organizations control environment. Describe what is meant by the control environment.
3. Controls are often classified as entity level controls, transaction level controls, and processing level controls. Please describe each of these controls AND give an example of each.
4. Please distinguish detective controls from preventive controls.
5. Assume that you are auditing a purchasing division. The objectives of the purchasing division are to buy inventory at the best prices possible for the company based on validly authorized purchase orders received from the companys various operating divisions. Purchasing department representatives negotiate the best deals possible from an approved list of third party suppliers. For this division, identify a preventive control that should be in place AND identify a detective control that should be in place. State your reasons for each.