Question 1

Personnel responsible for performing internal verification procedures must be independent of those originally responsible for preparing the data.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following components of the control environment define the existing lines of responsibility and authority?

Accepted Answer

A) organizational structure 
B) management philosophy and operating style 
C) human resource policies and practices 
D) management integrity and ethical values 
A) organizational structure 
B) management philosophy and operating style 
C) human resource policies and practices 
D) management integrity and ethical values

Question 3

Of the following statements about internal controls,which one is least likely to be correct?

Accepted Answer

A) No one person should be responsible for the custodial responsibility and the recording responsibility for an asset. 
B) Transactions must be properly authorized before such transactions are processed. 
C) Because of the cost-benefit relationship,a client may apply controls on a test basis. 
D) Control procedures reasonably ensure that collusion among employees cannot occur. 
A) No one person should be responsible for the custodial responsibility and the recording responsibility for an asset. 
B) Transactions must be properly authorized before such transactions are processed. 
C) Because of the cost-benefit relationship,a client may apply controls on a test basis. 
D) Control procedures reasonably ensure that collusion among employees cannot occur.

Question 4

Which of the following describes the process of implementing a new system in one part of the organization,while other locations continue to use the current system?

Accepted Answer

A) parallel testing 
B) online testing 
C) pilot testing 
D) control testing 
A) parallel testing 
B) online testing 
C) pilot testing 
D) control testing

Question 5

The internal control framework used by most U.S.companies is the ________ framework.

Accepted Answer

A) FASB 
B) PCAOB 
C) COSO 
D) SEC 
A) FASB 
B) PCAOB 
C) COSO 
D) SEC

Question 6

Reasonable assurance allows for

Accepted Answer

A) low likelihood that material misstatements will not be prevented or detected by internal controls. 
B) no likelihood that material misstatements will not be prevented or detected by internal control. 
C) moderate likelihood that material misstatements will not be prevented or detected by internal control. 
D) high likelihood that material misstatements will not be prevented or detected by internal control. 
A) low likelihood that material misstatements will not be prevented or detected by internal controls. 
B) no likelihood that material misstatements will not be prevented or detected by internal control. 
C) moderate likelihood that material misstatements will not be prevented or detected by internal control. 
D) high likelihood that material misstatements will not be prevented or detected by internal control.

Question 7

Identify the three categories of application controls,and give one example of each.

Accepted Answer

Application controls fall into three cat

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

The Sarbanes-Oxley Act requires

Accepted Answer

A) all public companies to issue reports on internal controls. 
B) all public companies to define adequate internal controls. 
C) the auditor of public companies to design effective internal controls. 
D) the auditor of public companies to withdraw from an engagement if internal controls are weak. 
A) all public companies to issue reports on internal controls. 
B) all public companies to define adequate internal controls. 
C) the auditor of public companies to design effective internal controls. 
D) the auditor of public companies to withdraw from an engagement if internal controls are weak.

Question 10

Output controls need to be designed for which of the following data integrity objectives?

Accepted Answer

A) detecting errors after the processing is completed 
B) preventing errors before the processing is completed 
C) detecting errors in the general ledger adjustment process 
D) preventing errors in separation of duties for IT personnel 
A) detecting errors after the processing is completed 
B) preventing errors before the processing is completed 
C) detecting errors in the general ledger adjustment process 
D) preventing errors in separation of duties for IT personnel

Question 11

Certain principles dictate the proper design and use of documents and records.Briefly describe several of these principles.

Accepted Answer

•Documents should be prenumbered consecu

Question 12

Without an effective ________,the other components of the COSO framework are unlikely to result in effective internal control,regardless of their quality.

Accepted Answer

A) risk assessment policy 
B) monitoring policy 
C) control environment 
D) system of control activities 
A) risk assessment policy 
B) monitoring policy 
C) control environment 
D) system of control activities

Question 13

When the auditor is obtaining an understanding of the independent computer service center's internal controls,the auditor should

Accepted Answer

A) use the same criteria used to evaluate the client's internal controls. 
B) use different criteria because the service center resides outside the company. 
C) use the same criteria used to evaluate the client's internal controls but omit tests of transactions. 
D) use different criteria for the service center by including substantive tests of balances. 
A) use the same criteria used to evaluate the client's internal controls. 
B) use different criteria because the service center resides outside the company. 
C) use the same criteria used to evaluate the client's internal controls but omit tests of transactions. 
D) use different criteria for the service center by including substantive tests of balances.

Question 14

Two key concepts that underlie management's design and implementation of internal control are

Accepted Answer

A) costs and materiality. 
B) absolute assurance and costs. 
C) inherent limitations and reasonable assurance. 
D) collusion and materiality. 
A) costs and materiality. 
B) absolute assurance and costs. 
C) inherent limitations and reasonable assurance. 
D) collusion and materiality.

Question 15

If an auditor wishes to rely on the work of internal auditors (IA),the auditor must obtain satisfactory evidence related to the IA's competence,integrity,and objectivity.

Accepted Answer

A) True 
 B)False

Question 16

General controls include all of the following except

Accepted Answer

A) systems development. 
B) online security. 
C) processing controls. 
D) hardware controls. 
A) systems development. 
B) online security. 
C) processing controls. 
D) hardware controls.

Question 17

Which of the following tests determines that every field in a record has been completed?

Accepted Answer

A) validation 
B) sequence 
C) completeness 
D) programming 
A) validation 
B) sequence 
C) completeness 
D) programming

Question 18

A(n)________ is a computer resource deployment and procurement model that enables an organization to obtain IT resources and applications from any location via an Internet connection.

Accepted Answer

A) application service provider 
B) firewall 
C) cloud computing environment 
D) local area network 
A) application service provider 
B) firewall 
C) cloud computing environment 
D) local area network

Question 19

Which of the following factors may increase risks to an organization?

Accepted Answer

A)    
B)    
C)    
D)    
A)    
B)    
C)    
D)

Question 20

A large portion of errors in IT systems result from data entry errors.

Accepted Answer

A) True 
 B)False

Exam 11: Internal Control and Coso Framework

Personnel responsible for performing internal verification procedures must be independent of those originally responsible for preparing the data.

Which of the following components of the control environment define the existing lines of responsibility and authority?

Of the following statements about internal controls,which one is least likely to be correct?

Which of the following describes the process of implementing a new system in one part of the organization,while other locations continue to use the current system?

The internal control framework used by most U.S.companies is the ________ framework.

Reasonable assurance allows for

Identify the three categories of application controls,and give one example of each.

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

The Sarbanes-Oxley Act requires

Output controls need to be designed for which of the following data integrity objectives?

Certain principles dictate the proper design and use of documents and records.Briefly describe several of these principles.

Without an effective ________,the other components of the COSO framework are unlikely to result in effective internal control,regardless of their quality.

When the auditor is obtaining an understanding of the independent computer service center's internal controls,the auditor should

Two key concepts that underlie management's design and implementation of internal control are

If an auditor wishes to rely on the work of internal auditors (IA),the auditor must obtain satisfactory evidence related to the IA's competence,integrity,and objectivity.

General controls include all of the following except

Which of the following tests determines that every field in a record has been completed?

A(n)________ is a computer resource deployment and procurement model that enables an organization to obtain IT resources and applications from any location via an Internet connection.

Which of the following factors may increase risks to an organization?

A large portion of errors in IT systems result from data entry errors.

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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