Question 1

The Handbook Section "Communication with Management of Matters Identified During the Financial Statement Audit" requires that:

Accepted Answer

A) All nontrivial misstatements are communicated to management in writing. 
B) All nontrivial misstatements and possible illegal acts are communicated to management. 
C) All serious control risks uncovered are communicated to management in writing. 
D) Only frauds and illegal acts are communicated to management. 
A) All nontrivial misstatements are communicated to management in writing. 
B) All nontrivial misstatements and possible illegal acts are communicated to management. 
C) All serious control risks uncovered are communicated to management in writing. 
D) Only frauds and illegal acts are communicated to management. B

Question 2

The primary reason to evaluate internal control is to formulate constructive suggestions for improvement.

Accepted Answer

A) True 
 B)False  False

Question 3

The internal control objective of accuracy is related to the financial statement assertion of:

Accepted Answer

A) Occurrence 
B) Completeness 
C) Valuation 
D) Presentation 
A) Occurrence 
B) Completeness 
C) Valuation 
D) Presentation C

Question 4

General controls like environmental controls are primarily preventive in nature.

Accepted Answer

A) True 
 B)False

Question 5

Classification refers to ensuring that the accounting for transactions is in the period they occur.

Accepted Answer

A) True 
 B)False

Question 6

The COSO definition of internal control says that internal control is a process to achieve objectives in which of the following categories?

Accepted Answer

A) Compliance with applicable laws and regulations, usefulness of financial information for making decisions, and the ability of the company to continue in operation. 
B) Usefulness of financial information for making decisions, reliability of financial reporting, and the ability of the company to continue in operation. 
C) Reliability of financial reporting, the usefulness of financial information for making decisions, and compliance with applicable laws and regulations. 
D) Effectiveness and efficiency of operations, reliability of financial reporting, and compliance with applicable laws and regulations. 
A) Compliance with applicable laws and regulations, usefulness of financial information for making decisions, and the ability of the company to continue in operation. 
B) Usefulness of financial information for making decisions, reliability of financial reporting, and the ability of the company to continue in operation. 
C) Reliability of financial reporting, the usefulness of financial information for making decisions, and compliance with applicable laws and regulations. 
D) Effectiveness and efficiency of operations, reliability of financial reporting, and compliance with applicable laws and regulations.

Question 7

The most cost effective types of controls over data are:

Accepted Answer

A) Design controls. 
B) Batch controls. 
C) Input controls. 
D) Monitoring controls. 
A) Design controls. 
B) Batch controls. 
C) Input controls. 
D) Monitoring controls.

Question 8

An auditor is required to obtain a sufficient understanding of internal control ---to plan the audit.This requirement encompasses obtaining an understanding of the control environment, the accounting system, and the control policies and procedures.
Required:
A) What are some of the reasons for obtaining an understanding of an audit client's internal control?
B) What audit work is required for an auditor to be able to assess control risk below maximum?
C) Should an auditor always try to obtain enough evidence to be able to assess control risk below maximum? Explain.

Accepted Answer

A) Reasons for obtaining an understandin

Question 9

Internal controls are put in place to keep the company on course toward achieving its goals.

Accepted Answer

A) True 
 B)False

Question 10

One of the auditor's primary concerns with regard to internal controls is:

Accepted Answer

A) The degree to which the internal controls are working as designed. 
B) The possibility of an inherent risk which has to be controlled. 
C) The impact the controls have on the accuracy of the accounting records. 
D) The amount of substantive work to be saved by testing controls instead. 
A) The degree to which the internal controls are working as designed. 
B) The possibility of an inherent risk which has to be controlled. 
C) The impact the controls have on the accuracy of the accounting records. 
D) The amount of substantive work to be saved by testing controls instead.

Question 11

Anyone who designs a processing system should:

Accepted Answer

A) Not do the documentation. 
B) Be independent of management. 
C) Have access to the data so they can make the system more efficient. 
D) Not do the technical programming work. 
A) Not do the documentation. 
B) Be independent of management. 
C) Have access to the data so they can make the system more efficient. 
D) Not do the technical programming work.

Question 12

At the planning stage, the auditor's goal is to:

Accepted Answer

A) Select the most effective set of evidence gathering techniques. 
B) Maximize audit fees. 
C) Select the most cost effective set of evidence gathering techniques. 
D) Minimize field work at remote locations. 
A) Select the most effective set of evidence gathering techniques. 
B) Maximize audit fees. 
C) Select the most cost effective set of evidence gathering techniques. 
D) Minimize field work at remote locations.

Question 13

Process alignment refers to:

Accepted Answer

A) The way that various IT systems are integrated to operate effectively as one system. 
B) Control activities to ensure records are properly retained and secured. 
C) Ensuring all network devices are at the current patch level. 
D) Ensuring that firewalls are in place, backed up by password protection over data access. 
A) The way that various IT systems are integrated to operate effectively as one system. 
B) Control activities to ensure records are properly retained and secured. 
C) Ensuring all network devices are at the current patch level. 
D) Ensuring that firewalls are in place, backed up by password protection over data access.

Question 14

An auditor does not need to test:

Accepted Answer

A) Control strengths because they are known to be strengths. 
B) Control weaknesses because they are known to be weak. 
C) Control strengths because they offset weaknesses. 
D) Control weaknesses because they are offset by strengths. 
A) Control strengths because they are known to be strengths. 
B) Control weaknesses because they are known to be weak. 
C) Control strengths because they offset weaknesses. 
D) Control weaknesses because they are offset by strengths.

Question 15

The most important feature of control is the documentation of the policies and procedures.

Accepted Answer

A) True 
 B)False

Question 16

The internal control objective of ensuring that all sales on credit are recorded in accordance with GAAP is:

Accepted Answer

A) Accuracy 
B) Classification 
C) Accounting 
D) Proper period 
A) Accuracy 
B) Classification 
C) Accounting 
D) Proper period

Question 17

An advantage of using a pre-printed audit questionnaire is that the auditor is less likely to forget to ask some important question.

Accepted Answer

A) True 
 B)False

Question 18

The auditor's primary purpose for evaluating internal control is to

Accepted Answer

A) Help design of the final audit plan. 
B) Help management design internal control systems 
C) Help judge how much control is necessary. 
D) Help determine much business risk is acceptable. 
A) Help design of the final audit plan. 
B) Help management design internal control systems 
C) Help judge how much control is necessary. 
D) Help determine much business risk is acceptable.

Question 19

The auditor's control risk assessment will affect the procedures to be included in the audit.

Accepted Answer

A) True 
 B)False

Question 20

Controls such as those to protect inventory should be put in place no matter what the cost.

Accepted Answer

A) True 
 B)False

The Handbook Section "Communication with Management of Matters Identified During the Financial Statement Audit" requires that:

The primary reason to evaluate internal control is to formulate constructive suggestions for improvement.

The internal control objective of accuracy is related to the financial statement assertion of:

General controls like environmental controls are primarily preventive in nature.

Classification refers to ensuring that the accounting for transactions is in the period they occur.

The COSO definition of internal control says that internal control is a process to achieve objectives in which of the following categories?

The most cost effective types of controls over data are:

Internal controls are put in place to keep the company on course toward achieving its goals.

One of the auditor's primary concerns with regard to internal controls is:

Anyone who designs a processing system should:

At the planning stage, the auditor's goal is to:

Process alignment refers to:

An auditor does not need to test:

The most important feature of control is the documentation of the policies and procedures.

The internal control objective of ensuring that all sales on credit are recorded in accordance with GAAP is:

An advantage of using a pre-printed audit questionnaire is that the auditor is less likely to forget to ask some important question.

The auditor's primary purpose for evaluating internal control is to

The auditor's control risk assessment will affect the procedures to be included in the audit.

Controls such as those to protect inventory should be put in place no matter what the cost.

Introduction to Auditing

Audit, Assurance, and Quality Control Standards

Reports on Audited Financial Statements and Audited Internal Controlt

Professional Ethics and Auditor Responsibilities

Legal Liability

Preliminary Audit Planning: Understanding the Auditee

Assessing Risks and Internal Control

Audit Evidence and Assurance

Audit Sampling

Revenues, Receivables, and Receipts Process

Purchases, Payables, and Payments Processtrue

Production and Payroll Process

Finance and Investment Process

Completing the Audit

Other Public Accounting Services and Reports

Fraud Awareness Auditing

Filters

Exam 9: Control Assessment and Testing

The Handbook Section "Communication with Management of Matters Identified During the Financial Statement Audit" requires that:

The primary reason to evaluate internal control is to formulate constructive suggestions for improvement.

The internal control objective of accuracy is related to the financial statement assertion of:

General controls like environmental controls are primarily preventive in nature.

Classification refers to ensuring that the accounting for transactions is in the period they occur.

The COSO definition of internal control says that internal control is a process to achieve objectives in which of the following categories?

The most cost effective types of controls over data are:

Internal controls are put in place to keep the company on course toward achieving its goals.

One of the auditor's primary concerns with regard to internal controls is:

Anyone who designs a processing system should:

At the planning stage, the auditor's goal is to:

Process alignment refers to:

An auditor does not need to test:

The most important feature of control is the documentation of the policies and procedures.

The internal control objective of ensuring that all sales on credit are recorded in accordance with GAAP is:

An advantage of using a pre-printed audit questionnaire is that the auditor is less likely to forget to ask some important question.

The auditor's primary purpose for evaluating internal control is to

The auditor's control risk assessment will affect the procedures to be included in the audit.

Controls such as those to protect inventory should be put in place no matter what the cost.

Introduction to Auditing

Audit, Assurance, and Quality Control Standards

Reports on Audited Financial Statements and Audited Internal Controlt

Professional Ethics and Auditor Responsibilities

Legal Liability

Preliminary Audit Planning: Understanding the Auditee

Assessing Risks and Internal Control

Audit Evidence and Assurance

Audit Sampling

Revenues, Receivables, and Receipts Process

Purchases, Payables, and Payments Processtrue

Production and Payroll Process

Finance and Investment Process

Completing the Audit

Other Public Accounting Services and Reports

Fraud Awareness Auditing

Filters