What are the main components of the COSO framework for internal controls?

The main components of the COSO framework for internal controls are designed to provide a comprehensive structure for organizations to optimize their internal control processes. The correct choice emphasizes five critical components:

1. Control Environment: This sets the tone for the organization and influences the control consciousness of its employees. It includes the governance structure, ethical values, and the importance placed on internal controls.

2. Risk Assessment: This component focuses on identifying and analyzing risks that could prevent the organization from achieving its objectives. By understanding and assessing risks, organizations can determine what controls are needed.

3. Control Activities: These are the policies and procedures that help ensure management directives are carried out. They include various activities like approvals, authorizations, verifications, and reconciliations.

4. Information and Communication: This involves the systems and processes that facilitate the timely and effective communication of relevant information throughout the organization. Effective communication ensures that employees understand their roles in the internal control system.

5. Monitoring Activities: This component includes continuous or periodic assessments of the internal control system to ensure they are functioning as intended. It also involves identifying and addressing any deficiencies in a timely manner.

By encapsulating these components, the COSO framework helps organizations establish,