Question 1

The auditors primary purpose in auditing the client's system of internal control over financial reporting is

Accepted Answer

A) to prevent fraudulent financial statements from being issued to the public. 
B) to evaluate the effectiveness of the company's internal controls over all relevant assertions in the financial statements. 
C) to report to management that the internal controls are effective in preventing misstatements from appearing on the financial statements. 
D) to efficiently conduct the Audit of Financial Statements. 
A) to prevent fraudulent financial statements from being issued to the public. 
B) to evaluate the effectiveness of the company's internal controls over all relevant assertions in the financial statements. 
C) to report to management that the internal controls are effective in preventing misstatements from appearing on the financial statements. 
D) to efficiently conduct the Audit of Financial Statements.

Question 2

Companies using e-commerce systems to transact business electronically do not need to be concerned about how their e-commerce partners manage IT systems risks.

Accepted Answer

A) True 
 B)False

Question 3

Under the Dodd-Frank federal financial reform legislation,all public companies are required to obtain an audit report on internal control over financial reporting.

Accepted Answer

A) True 
 B)False

Question 4

External financial statement auditors must obtain evidence regarding what attributes of an internal audit (IA)department if the external auditors intend to rely on IA's work?

Accepted Answer

A) integrity 
B) objectivity 
C) competence 
D) all of the above 
A) integrity 
B) objectivity 
C) competence 
D) all of the above

Question 5

Security controls should require that users enter a(n)________ before being allowed access to software and other related data files.

Accepted Answer

A) echo check 
B) parity check 
C) self-diagnosis test 
D) authorized password 
A) echo check 
B) parity check 
C) self-diagnosis test 
D) authorized password

Question 6

Which of the following statements is most correct with respect to separation of duties?

Accepted Answer

A) A person who has temporary or permanent custody of an asset should account for that asset. 
B) Employees who authorize transactions should not have custody of related assets. 
C) Employees who open cash receipts should record the amounts in the subsidiary ledgers. 
D) Employees who authorize transactions should have recording responsibility for these transactions. 
A) A person who has temporary or permanent custody of an asset should account for that asset. 
B) Employees who authorize transactions should not have custody of related assets. 
C) Employees who open cash receipts should record the amounts in the subsidiary ledgers. 
D) Employees who authorize transactions should have recording responsibility for these transactions.

Question 7

Parallel testing can be used in combination with pilot testing to test new systems.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following best explains the relationship between general controls and application controls?

Accepted Answer

A) Application controls are effective even if general controls are extremely weak. 
B) Application controls are likely to be effective only when general controls are effective. 
C) General controls have no impact on application controls. 
D) None of the above 
A) Application controls are effective even if general controls are extremely weak. 
B) Application controls are likely to be effective only when general controls are effective. 
C) General controls have no impact on application controls. 
D) None of the above

Question 9

________ protect(s)the security of electronic communication when information is transmitted and when it is stored.

Accepted Answer

A) Firewalls 
B) Digital signatures 
C) Encryption 
D) A database 
A) Firewalls 
B) Digital signatures 
C) Encryption 
D) A database

Question 10

Section 404 of the Sarbanes-Oxley Act requires that both private and public companies issue an internal control report.

Accepted Answer

A) True 
 B)False

Question 11

In IT systems,if general controls are effective,it increases the auditor's ability to rely on application controls to reduce control risk.

Accepted Answer

A) True 
 B)False

Question 12

Auditing standards prohibit reliance on the work of internal auditors due to the lack of independence of the internal auditors.

Accepted Answer

A) True 
 B)False

Question 13

Controls which are designed to assure that the information entered into the computer is authorized,complete,and accurate are called

Accepted Answer

A) input controls. 
B) processing controls. 
C) output controls. 
D) general controls. 
A) input controls. 
B) processing controls. 
C) output controls. 
D) general controls.

Question 14

Sarbanes-Oxley requires management to issue an internal control report that includes two specific items.Which of the following is one of these two requirements?

Accepted Answer

A) a statement that management is responsible for establishing and maintaining an adequate internal control structure and procedures for financial reporting 
B) a statement that management and the board of directors are jointly responsible for establishing and maintaining an adequate internal control structure and procedures for financial reporting 
C) a statement that management,the board of directors,and the external auditors are jointly responsible for establishing and maintaining an adequate internal control structure and procedures for financial reporting 
D) a statement that the external auditors are solely responsible for establishing and maintaining an adequate system of internal control 
A) a statement that management is responsible for establishing and maintaining an adequate internal control structure and procedures for financial reporting 
B) a statement that management and the board of directors are jointly responsible for establishing and maintaining an adequate internal control structure and procedures for financial reporting 
C) a statement that management,the board of directors,and the external auditors are jointly responsible for establishing and maintaining an adequate internal control structure and procedures for financial reporting 
D) a statement that the external auditors are solely responsible for establishing and maintaining an adequate system of internal control

Question 15

Which of the following activities would be least likely to strengthen a company's internal control?

Accepted Answer

A) separating accounting from other financial operations 
B) maintaining insurance for fire and theft 
C) fixing responsibility for the performance of employee duties 
D) carefully selecting and training employees 
A) separating accounting from other financial operations 
B) maintaining insurance for fire and theft 
C) fixing responsibility for the performance of employee duties 
D) carefully selecting and training employees

Question 16

The ________ is helpful in preventing classification errors if it accurately describes which type of transaction should be in each account.

Accepted Answer

A) general ledger 
B) general journal 
C) trial balance 
D) chart of accounts 
A) general ledger 
B) general journal 
C) trial balance 
D) chart of accounts

Question 17

Management has a legal and professional responsibility to be sure that the financial statements are prepared in accordance with reporting requirements of applicable accounting frameworks.

Accepted Answer

A) True 
 B)False

Question 18

In performing the audit of internal control over financial reporting,the auditor emphasizes internal control over classes of transactions because

Accepted Answer

A) the accuracy of accounting system outputs depends heavily on the accuracy of inputs and processing. 
B) the class of transaction is where most fraud schemes occur. 
C) account balances are less important to the auditor then the changes in the account balances. 
D) classes of transactions tests are the most efficient manner to compensate for inherent risk. 
A) the accuracy of accounting system outputs depends heavily on the accuracy of inputs and processing. 
B) the class of transaction is where most fraud schemes occur. 
C) account balances are less important to the auditor then the changes in the account balances. 
D) classes of transactions tests are the most efficient manner to compensate for inherent risk.

Question 19

List the four underlying principles of risk assessment per the COSO framework

Accepted Answer

The underlying principles of risk assess

Question 20

Identify the six categories of general controls and give one example of each.

Accepted Answer

General controls fall into the following

Exam 11: Internal Control and Coso Framework

The auditors primary purpose in auditing the client's system of internal control over financial reporting is

Companies using e-commerce systems to transact business electronically do not need to be concerned about how their e-commerce partners manage IT systems risks.

Under the Dodd-Frank federal financial reform legislation,all public companies are required to obtain an audit report on internal control over financial reporting.

External financial statement auditors must obtain evidence regarding what attributes of an internal audit (IA)department if the external auditors intend to rely on IA's work?

Security controls should require that users enter a(n)________ before being allowed access to software and other related data files.

Which of the following statements is most correct with respect to separation of duties?

Parallel testing can be used in combination with pilot testing to test new systems.

Which of the following best explains the relationship between general controls and application controls?

________ protect(s)the security of electronic communication when information is transmitted and when it is stored.

Section 404 of the Sarbanes-Oxley Act requires that both private and public companies issue an internal control report.

In IT systems,if general controls are effective,it increases the auditor's ability to rely on application controls to reduce control risk.

Auditing standards prohibit reliance on the work of internal auditors due to the lack of independence of the internal auditors.

Controls which are designed to assure that the information entered into the computer is authorized,complete,and accurate are called

Sarbanes-Oxley requires management to issue an internal control report that includes two specific items.Which of the following is one of these two requirements?

Which of the following activities would be least likely to strengthen a company's internal control?

The ________ is helpful in preventing classification errors if it accurately describes which type of transaction should be in each account.

Management has a legal and professional responsibility to be sure that the financial statements are prepared in accordance with reporting requirements of applicable accounting frameworks.

In performing the audit of internal control over financial reporting,the auditor emphasizes internal control over classes of transactions because

List the four underlying principles of risk assessment per the COSO framework

Identify the six categories of general controls and give one example of each.

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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