Question

Melissa is a staff accountant for Quality Paper Company, which has strict corporate policies on appropriate use of corporate resources. The first week of March, Melissa saw Kent, the branch manager putting printer paper and toner into his briefcase on his way out the door. This situation best reflects a weakness in which aspect of internal environment, as discussed in the COSO Enterprise Risk Management Framework?

a. Integrity and ethical values.
b. Risk management philosophy.
c. Restrict access to assets.
d. Methods of assigning authority and responsibility.

Answer 1

The described scenario reveals a weakness in 'a. Integrity and ethical values' within the company's internal environment, as defined by the COSO Enterprise Risk Management Framework.

Step-by-step explanation:

The situation described with Melissa witnessing Kent, the branch manager, taking printer paper and toner potentially indicates a weakness in internal control within Quality Paper Company. According to the COSO Enterprise Risk Management Framework, this type of behavior would most align with a weakness in 'a. Integrity and ethical values.' This is because the action of taking company resources for personal use directly conflicts with the principles of integrity and ethical behavior expected within a company. It showcases a disregard for corporate policies and points toward a culture that may not sufficiently promote ethical conduct. If employees observe leadership not adhering to ethical standards, it could potentially lead to a broader breakdown in the internal environment, where such actions become normalized.

The situation described in the question reflects a weakness in the aspect of internal environment known as Integrity and ethical values, as discussed in the COSO Enterprise Risk Management Framework. Melissa, the staff accountant, observed Kent, the branch manager, putting printer paper and toner into his briefcase, which suggests a violation of the company's policies on appropriate use of corporate resources.