Question at position 28 One of the principles of COSO’s internal control framework recommends the board of directors be independent. Which component of COSO’s internal control framework is most relevant to this recommendation?Control Activities.Control Environment.Risk Assessment.Information and Communication.

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To begin, let's restate the question and the available options to frame the reasoning clearly.
Question: One of the principles of COSO’s internal control framework recommends the board of directors be independent. Which component of COSO’s internal control framework is most relevant to this recommendation?
Answer options:
- Control Activities.
- Control Environment.
- Risk Assessment.
- Information and Communication.

Now, evaluate each option in turn:
Option 1: Control Activities. This component focuses on the actions, policies, procedures, and approvals implemented to mitigate risks identified by the organization. While these activities are essential for effective internal control, they describe what the organization does to control risks rather than the overarching organizational tone or governance structure that enables independence of the board. Therefore, this option does not directly capture the independence principle.
Option 2: Control Environment. The control environment is the foundation of all other components and encompasses the organizational atmosphere, including governance, integrity, ethical values, and importantly, the board’s independence and oversight. Because a truly independent board sets the tone at the top and supports accountability and ethical behavior, this component directly aligns with the principle about board independence.
Option 3: Risk Assessment. This component involves identifying and analyzing risks to achieving objectives and determining how risks should be managed. While risk assessment informs control activities and responses, it does not specify governance characteristics such as board independence. Thus, it is not the best fit for this particular principle.
Option 4: Information and Communication. This element concerns the identification, capture, and exchange of information in a form and time frame that enables people to carry out responsibilities. While essential for effective control, it concentrates on information flow rather than governance structure or board independence, making it a less direct match for the independence principle.

In summary, option 2 stands out because the independence of the board is a governance-related attribute that establishes the tone at the top and supports ethical behavior and oversight, which are core aspects of the Control Environment. The other options address execution of controls, risk analysis, and information flow, but do not embody the governance foundation as directly as the Control Environment does.

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