CMFO Internal Control And Auditing Practice Exam

Setting objectives is essential when establishing an internal control system. Objectives define what the organization expects to achieve in operations, reporting, and compliance, and they guide the design and implementation of controls. With clear objectives, risk assessment focuses on what could prevent those objectives from being achieved, and control activities are tailored to address those specific risks. They also provide a basis for evaluating control effectiveness and for auditors to judge whether controls align with management’s goals. Without explicit objectives, controls can be misaligned, either over- or under-designed, and performance criteria for testing controls become unreliable. In practice, objectives should be defined clearly and mapped to controls so the system remains relevant as conditions change. Hence, this statement is not correct; setting objectives is needed.