Control and accounting information systems suggested answers to discussion questions

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rais12 SM CH07
COSO’s Nine ERM Event Categories

Event Categories

External Factors

Internal Factors



• Availability of capital; lower or higher costs of capital

• Inadequate access to or poor allocation of capital

• Rising or declining unemployment rates

• Availability and capability of company assets

• Price movements upward or downward

• Complexity of systems

• Ability to issue credit and possibility of default

• Concentration of competitors, customers, or vendors

• Presence or absence of liquidity

• Movements in the financial markets or currency fluctuations

• Lower barriers to competitive entry, resulting in new competitors

• Mergers or acquisitions

• Potential regulatory, contractual, or criminal legal liability

Natural Environment


• Natural disasters such as fires, floods, or earthquakes

• Workplace accidents, health or safety concerns

• Emissions and waste

• Employees acting dishonestly or unethically

• Energy restrictions or shortages

• Employee skills and capability

• Restrictions limiting development

• Strikes or expiration of labor agreements



• Election of government officials with new political agendas

• Process modification without proper change management procedures

• New laws and regulations

Process execution errors

• Public policy, including higher or lower taxes

• Poorly designed processes

• Regulation affecting the company’s ability to compete

• Suppliers cannot deliver quality goods on time



• Privacy

• Insufficient capacity to handle peak IT usages

• Terrorism

• Data or system unavailability

• Corporate citizenship

• Poor systems selection/development

• Human resource issues causing production shortages or stoppages

• Inadequately maintained systems

• Changing demographics, social mores, family structures, and work/life priorities

• Security breaches

• Consumer behavior that changes products and services demand or creates buying opportunity

• Inadequate data integrity


• New e-business technologies that lower infrastructure costs or increase demand for IT-based services

Emerging technology

• Increased or decreased availability of data

• Interruptions or downtime caused by external parties

7.9 Explain what is meant by objective setting and describe the four types of objectives used in ERM.
Objective setting, the second ERM component, is determining what the company hopes to achieve. It is often referred to as the corporate vision or mission. The four types of objectives used in ERM are:

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