Question 1

When one material weakness is present at the end of the year,management of a public company must conclude that internal control over financial reporting is

Accepted Answer

A) insufficient. 
B) inadequate. 
C) ineffective. 
D) inefficient. 
A) insufficient. 
B) inadequate. 
C) ineffective. 
D) inefficient.

Question 2

Firewalls can protect company data and software programs.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following statements related to application controls is correct?

Accepted Answer

A) Application controls relate to various aspects of the IT function including software acquisition and the processing of transactions. 
B) Application controls relate to various aspects of the IT function including physical security and the processing of transactions in various cycles. 
C) Application controls relate to all aspects of the IT function. 
D) Application controls relate to the processing of individual transactions. 
A) Application controls relate to various aspects of the IT function including software acquisition and the processing of transactions. 
B) Application controls relate to various aspects of the IT function including physical security and the processing of transactions in various cycles. 
C) Application controls relate to all aspects of the IT function. 
D) Application controls relate to the processing of individual transactions.

Question 4

An example of a physical control is

Accepted Answer

A) a hash total. 
B) a parallel test. 
C) the matching of employee fingerprints to a database before access to the system is allowed. 
D) the use of backup generators to prevent data loss during power outages. 
A) a hash total. 
B) a parallel test. 
C) the matching of employee fingerprints to a database before access to the system is allowed. 
D) the use of backup generators to prevent data loss during power outages.

Question 5

To obtain an understanding of an entity's control environment,an auditor should concentrate on the substance of management's policies and procedures rather than their form because

Accepted Answer

A) management may establish appropriate policies and procedures but not act on them. 
B) the board of directors may not be aware of management's attitude toward the control environment. 
C) the auditor may believe that the policies and procedures are inappropriate for that particular entity. 
D) the policies and procedures may be so weak that no reliance is contemplated by the auditor. 
A) management may establish appropriate policies and procedures but not act on them. 
B) the board of directors may not be aware of management's attitude toward the control environment. 
C) the auditor may believe that the policies and procedures are inappropriate for that particular entity. 
D) the policies and procedures may be so weak that no reliance is contemplated by the auditor.

Question 6

Typical controls developed for manual systems which are still important in IT systems include

Accepted Answer

A) management's authorization of transactions. 
B) competent personnel. 
C) adequate preparation of input source documents. 
D) all of the above. 
A) management's authorization of transactions. 
B) competent personnel. 
C) adequate preparation of input source documents. 
D) all of the above.

Question 7

Rather than maintain an internal IT center,many companies outsource their basic IT functions such as payroll to an

Accepted Answer

A) external general service provider. 
B) independent computer service center. 
C) internal control service provider. 
D) internal auditor. 
A) external general service provider. 
B) independent computer service center. 
C) internal control service provider. 
D) internal auditor.

Question 8

An internal control deficiency occurs when computer personnel

Accepted Answer

A) participate in computer software acquisition decisions. 
B) design flowcharts and narratives for computerized systems. 
C) originate changes in customer master files. 
D) provide physical security over program files. 
A) participate in computer software acquisition decisions. 
B) design flowcharts and narratives for computerized systems. 
C) originate changes in customer master files. 
D) provide physical security over program files.

Question 9

Which of the following is most correct regarding the requirements under Section 404 of the Sarbanes-Oxley Act?

Accepted Answer

A) The audits of internal control and the financial statements provide reasonable assurance as to misstatements. 
B) The audit of internal control provides absolute assurance of misstatement. 
C) The audit of financial statements provides absolute assurance of misstatement. 
D) The audits of internal control and the financial statements provide absolute assurance as to misstatements. 
A) The audits of internal control and the financial statements provide reasonable assurance as to misstatements. 
B) The audit of internal control provides absolute assurance of misstatement. 
C) The audit of financial statements provides absolute assurance of misstatement. 
D) The audits of internal control and the financial statements provide absolute assurance as to misstatements.

Question 10

One category of general controls is physical and online access controls.Describe the control and give at two examples of implementation of the control.

Accepted Answer

Physical controls over computer equipmen

Question 11

When dealing with the administration of the IT function and the segregation of IT duties

Accepted Answer

A) in large organizations,management should assign technology issues to outside consultants. 
B) programmers should investigate all security breaches. 
C) the board of directors should not get involved in IT decisions since it is a routine function handled by middle management. 
D) in complex environments,management may establish IT steering committees. 
A) in large organizations,management should assign technology issues to outside consultants. 
B) programmers should investigate all security breaches. 
C) the board of directors should not get involved in IT decisions since it is a routine function handled by middle management. 
D) in complex environments,management may establish IT steering committees.

Question 12

What are the two software testing strategies that companies typically use?
 Which strategy is more expensive?

Accepted Answer

Companies may use pilot testing and para

Question 13

________ is the information technology and internal control processes an organization has in place to protect computers,networks,programs,and data from unauthorized access.

Accepted Answer

A) Encryption 
B) A firewall 
C) Cybersecurity 
D) A processing control 
A) Encryption 
B) A firewall 
C) Cybersecurity 
D) A processing control

Question 14

To promote operational efficiency,the internal audit department would ideally report to

Accepted Answer

A) line management. 
B) the PCAOB. 
C) the Chief Accounting Officer. 
D) the audit committee. 
A) line management. 
B) the PCAOB. 
C) the Chief Accounting Officer. 
D) the audit committee.

Question 15

Hanlon Corp.maintains a large internal audit staff that reports directly to the accounting department.Audit reports prepared by the internal auditors indicate that the system is functioning as it should and that the accounting records are reliable.An independent auditor will probably

Accepted Answer

A) eliminate tests of controls. 
B) increase the depth of the study and evaluation of administrative controls. 
C) avoid duplicating the work performed by the internal audit staff. 
D) place limited reliance on the work performed by the internal audit staff. 
A) eliminate tests of controls. 
B) increase the depth of the study and evaluation of administrative controls. 
C) avoid duplicating the work performed by the internal audit staff. 
D) place limited reliance on the work performed by the internal audit staff.

Question 16

Programmers should only be allowed to work with test copies of programs and data.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following is correct with respect to the design and use of business documents?

Accepted Answer

A) The documents should be in paper format. 
B) Documents should be designed for a single purpose to avoid confusion in their use. 
C) Documents should be designed to be understandable only by those who use them. 
D) Documents should be prenumbered consecutively to facilitate control over missing documents. 
A) The documents should be in paper format. 
B) Documents should be designed for a single purpose to avoid confusion in their use. 
C) Documents should be designed to be understandable only by those who use them. 
D) Documents should be prenumbered consecutively to facilitate control over missing documents.

Question 18

Which of the following best describes an entity's accounting information and communication system?

Accepted Answer

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

Question 19

Describe each of the three broad objectives management typically has for internal control.With which of these objectives is the auditor primarily concerned?

Accepted Answer

The three objectives are:
•Reliability o

Question 20

Output controls focus on preventing errors during processing.

Accepted Answer

A) True 
 B)False

Exam 11: Internal Control and Coso Framework

When one material weakness is present at the end of the year,management of a public company must conclude that internal control over financial reporting is

Firewalls can protect company data and software programs.

Which of the following statements related to application controls is correct?

An example of a physical control is

To obtain an understanding of an entity's control environment,an auditor should concentrate on the substance of management's policies and procedures rather than their form because

Typical controls developed for manual systems which are still important in IT systems include

Rather than maintain an internal IT center,many companies outsource their basic IT functions such as payroll to an

An internal control deficiency occurs when computer personnel

Which of the following is most correct regarding the requirements under Section 404 of the Sarbanes-Oxley Act?

One category of general controls is physical and online access controls.Describe the control and give at two examples of implementation of the control.

When dealing with the administration of the IT function and the segregation of IT duties

What are the two software testing strategies that companies typically use? Which strategy is more expensive?

________ is the information technology and internal control processes an organization has in place to protect computers,networks,programs,and data from unauthorized access.

To promote operational efficiency,the internal audit department would ideally report to

Hanlon Corp.maintains a large internal audit staff that reports directly to the accounting department.Audit reports prepared by the internal auditors indicate that the system is functioning as it should and that the accounting records are reliable.An independent auditor will probably

Programmers should only be allowed to work with test copies of programs and data.

Which of the following is correct with respect to the design and use of business documents?

Which of the following best describes an entity's accounting information and communication system?

Describe each of the three broad objectives management typically has for internal control.With which of these objectives is the auditor primarily concerned?

Output controls focus on preventing errors during processing.

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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