Question 1

Who is responsible for establishing a private company's internal control?

Accepted Answer

A) senior management 
B) internal auditors 
C) FASB 
D) audit committee 
A) senior management 
B) internal auditors 
C) FASB 
D) audit committee A

Question 2

Discuss the four areas of responsibility under the IT function that should be segregated in large companies.

Accepted Answer

The responsibilities for IT management,systems development,operations,and data control should be separated:
•IT Management.Oversight of the IT function should be segregated from the systems development,operations,and data control functions.Oversight of IT should be the responsibility of the Chief Information Officer or IT manager.The CIO or IT manager should be responsible for oversight of the IT function to ensure that activities are carried out consistent with the IT strategic plan.A security administrator should monitor both physical and online access to hardware,software,and data files and investigate all security breaches.
•Systems development.Systems analysts are responsible for the overall design of each application system.They also coordinate the development,acquisition,and changes to IT systems by the IT personnel and the primary system users outside of IT.Programmers develop flowcharts for each new application,prepare computer instructions,test the programs,and document the results.Programmers and analysts should not have access to input data or computer operations to avoid using their knowledge of the system for personal benefit.
•Operations.Computer operators are responsible for the day-to-day operations of the computer.They also monitor computer consoles for messages about computer efficiency and malfunction.
•Data control.Data control personnel independently verify the quality of input and the reasonableness of output.Database administrators are responsible for the operation and access security of shared databases.

Question 3

Which of the following is not an example of an applications control?

Accepted Answer

A) Back-up of data is made to a remote site for data security. 
B) There is a preprocessing authorization of the sales transactions. 
C) There are reasonableness tests for the unit selling price of a sale. 
D) After processing,all sales transactions are reviewed by the sales department. 
A) Back-up of data is made to a remote site for data security. 
B) There is a preprocessing authorization of the sales transactions. 
C) There are reasonableness tests for the unit selling price of a sale. 
D) After processing,all sales transactions are reviewed by the sales department. A

Question 4

Which of the following is a component of general controls?

Accepted Answer

A) processing controls 
B) output controls 
C) back-up and contingency planning 
D) input controls 
A) processing controls 
B) output controls 
C) back-up and contingency planning 
D) input controls

Question 5

Discuss what is meant by the term "control environment" and identify four control environment subcomponents that the auditor should consider.

Accepted Answer

The control environment consists of the

Question 6

Internal controls

Accepted Answer

A) are implemented by and are the responsibility of the auditors. 
B) consist of policies and procedures designed to provide reasonable assurance that the company achieves its objectives and goals. 
C) guarantee that the company complies with all laws and regulations. 
D) only apply to SEC companies. 
A) are implemented by and are the responsibility of the auditors. 
B) consist of policies and procedures designed to provide reasonable assurance that the company achieves its objectives and goals. 
C) guarantee that the company complies with all laws and regulations. 
D) only apply to SEC companies.

Question 7

Control activities help assure that the necessary actions are taken to address risks to the achievement of the company's objectives.List the five types of control activities.

Accepted Answer

1. adequate separation of duties
2. prop

Question 8

Internal controls can never be regarded as completely effective.Even if company personnel could design an ideal system,its effectiveness depends on the

Accepted Answer

A) adequacy of the computer system. 
B) proper implementation by management. 
C) ability of the internal audit staff to maintain it. 
D) competency and dependability of the people using it. 
A) adequacy of the computer system. 
B) proper implementation by management. 
C) ability of the internal audit staff to maintain it. 
D) competency and dependability of the people using it.

Question 9

A(n)________ total represents the summary total of codes from all records in a batch that do not represent a meaningful total.

Accepted Answer

A) record 
B) hash 
C) output 
D) financial 
A) record 
B) hash 
C) output 
D) financial

Question 10

The effectiveness of automated controls depends solely on the competence of the personnel performing the controls.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following deals with ongoing or periodic assessment of the quality of internal control by management?

Accepted Answer

A) verifying activities 
B) monitoring activities 
C) oversight activities 
D) management activities 
A) verifying activities 
B) monitoring activities 
C) oversight activities 
D) management activities

Question 12

Which of the following is not one of the subcomponents of the control environment?

Accepted Answer

A) management's philosophy and operating style 
B) organizational structure 
C) adequate separation of duties 
D) commitment to competence 
A) management's philosophy and operating style 
B) organizational structure 
C) adequate separation of duties 
D) commitment to competence

Question 13

Control activities are a subcomponent of the information and communication component of internal control.

Accepted Answer

A) True 
 B)False

Question 14

Management's identification and analysis of risk is an ongoing process and is a critical component of effective internal control.An important first step is for management to identify factors that may increase risk.Identify at least five factors,observable by management,which may lead to increased risk in a typical business organization.

Accepted Answer

There are many factors that may lead to

Question 15

The primary emphasis by auditors is on controls over

Accepted Answer

A) classes of transactions. 
B) account balances. 
C) both A and B,because they are equally important. 
D) both A and B,because they vary from client to client. 
A) classes of transactions. 
B) account balances. 
C) both A and B,because they are equally important. 
D) both A and B,because they vary from client to client.

Question 16

If a control total were to be computed on each of the following data items,which would best be identified as a hash total for a payroll IT application?

Accepted Answer

A) gross wages earned 
B) employee numbers 
C) total hours worked 
D) total debit amounts and total credit amounts 
A) gross wages earned 
B) employee numbers 
C) total hours worked 
D) total debit amounts and total credit amounts

Question 17

IT controls are classified as either input controls or output controls.

Accepted Answer

A) True 
 B)False

Question 18

Define control for general controls and application controls.Also list the categories of controls included under general controls and application controls.

Accepted Answer

General controls are those that relate t

Question 19

If a company has an effective internal audit department,

Accepted Answer

A) the internal auditors can express an opinion on the fairness of the financial statements. 
B) their work cannot be used by the external auditors per PCAOB Standard 5. 
C) it can reduce external audit costs by providing direct assistance to the external auditors. 
D) the internal auditors must be CPAs in order for the external auditors to rely on their work. 
A) the internal auditors can express an opinion on the fairness of the financial statements. 
B) their work cannot be used by the external auditors per PCAOB Standard 5. 
C) it can reduce external audit costs by providing direct assistance to the external auditors. 
D) the internal auditors must be CPAs in order for the external auditors to rely on their work.

Question 20

Controls that are designed for each software application and are intended to help a company satisfy the transaction-related audit objectives are

Accepted Answer

A) user controls. 
B) general controls. 
C) audit controls. 
D) application controls. 
A) user controls. 
B) general controls. 
C) audit controls. 
D) application controls.

Exam 11: Internal Control and Coso Framework

Who is responsible for establishing a private company's internal control?

Discuss the four areas of responsibility under the IT function that should be segregated in large companies.

Which of the following is not an example of an applications control?

Which of the following is a component of general controls?

Discuss what is meant by the term "control environment" and identify four control environment subcomponents that the auditor should consider.

Internal controls

Control activities help assure that the necessary actions are taken to address risks to the achievement of the company's objectives.List the five types of control activities.

Internal controls can never be regarded as completely effective.Even if company personnel could design an ideal system,its effectiveness depends on the

A(n)________ total represents the summary total of codes from all records in a batch that do not represent a meaningful total.

The effectiveness of automated controls depends solely on the competence of the personnel performing the controls.

Which of the following deals with ongoing or periodic assessment of the quality of internal control by management?

Which of the following is not one of the subcomponents of the control environment?

Control activities are a subcomponent of the information and communication component of internal control.

The primary emphasis by auditors is on controls over

If a control total were to be computed on each of the following data items,which would best be identified as a hash total for a payroll IT application?

IT controls are classified as either input controls or output controls.

Define control for general controls and application controls.Also list the categories of controls included under general controls and application controls.

If a company has an effective internal audit department,

Controls that are designed for each software application and are intended to help a company satisfy the transaction-related audit objectives are

The Demand for Audit and Other Assurance Services

The Cpa Profession

Audit Reports

Professional Ethics

Legal Liability

Audit Responsibilities and Objectives

Audit Evidence

Audit Planning and Analytical Procedures

Materiality and Risk

Fraud Auditing

Assessing Control Risk and Reporting on Internal Controls

Overall Audit Strategy and Audit Program

Audit of the Sales and Collection Cycle: Tests of Controls

Audit Sampling for Tests of Controls and Substantive Tests of Transactions

Completing the Tests in the Sales and Collection Cycle: Accounts Receivable

Audit Sampling for Tests of Details of Balances

Audit of the Acquisition and Payment Cycle: Tests of Controls,

Completing the Tests in the Acquisition and Payment Cycle:

Audit of the Payroll and Personnel Cycle

Audit of the Inventory and Warehousing Cycle

Audit of the Capital Acquisition and Repayment Cycle

Audit of Cash and Financial Instruments

Completing the Audit

Other Assurance Services

Internal and Governmental Financial Auditing and Operational Auditing

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