Question 1

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 2

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 3

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 4

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 5

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

Accepted Answer

A) True 
 B)False

Question 6

An auditor should consider two key issues when obtaining an understanding of a client's internal controls. These issues are

Accepted Answer

A)  the effectiveness and efficiency of the controls. 
B)  the frequency and effectiveness of the controls. 
C)  the design and operating effectiveness of the controls. 
D)  the implementation and operating effectiveness of the controls. 
A)  the effectiveness and efficiency of the controls. 
B)  the frequency and effectiveness of the controls. 
C)  the design and operating effectiveness of the controls. 
D)  the implementation and operating effectiveness of the controls.

Question 7

When a company designs and implements internal controls, the cost of the controls is not a valid consideration.

Accepted Answer

A) True 
 B)False

Question 8

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 9

Which of the following is a risk assessment principle?

Accepted Answer

A)  accountability 
B)  use relevant, quality information to support the functioning of internal controls 
C)  consider the potential for fraud 
D)  develop general controls over technology 
A)  accountability 
B)  use relevant, quality information to support the functioning of internal controls 
C)  consider the potential for fraud 
D)  develop general controls over technology

Question 10

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 11

A small business has four employees, including the owner of the business, working for the business on a daily basis processing cash receipts, making cash disbursements, processing payroll, and invoicing customers. In this situation, separation of duties is impossible.

Accepted Answer

A) True 
 B)False

Question 12

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 13

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 14

Match between columns
                        Premises: The new and old systems operate simultaneously in all locations.
Controls that apply to processing of transactions.
Controls that relate to all aspects of the IT system.
A new system is implemented in one part of the organization while other locations continue to rely on the old system.
Controls such as proper authorization of documents, check digits, and adequate documentation, designed to assure that the information to be entered into the computer is authorized, complete, and accurate.
Controls such as review of data for reasonableness designed to assure that data generated by the computer is valid accurate complete and distributed only to authorized people.

Accepted Answer

The Answer of Error listing and Application controls and Processing is...

Question 15

Processing controls include the following tests:
Validation
Sequence
Data Reasonableness
Completeness
Describe what each control is designed to do.

Accepted Answer

Validation: ensures that a particular ty

Question 16

It is possible for management to design an ideal and effective system of internal controls for example over the counting of the physical inventory.

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

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

Accepted Answer

A) True 
 B)False

Question 19

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 20

Controls that relate to a specific use of the IT system, such as the processing of sales or cash receipts, are called application controls.

Accepted Answer

A) True 
 B)False

Exam 11: Internal Control and Coso Framework

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

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

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

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

An auditor should consider two key issues when obtaining an understanding of a client's internal controls. These issues are

When a company designs and implements internal controls, the cost of the controls is not a valid consideration.

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

Which of the following is a risk assessment principle?

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

A small business has four employees, including the owner of the business, working for the business on a daily basis processing cash receipts, making cash disbursements, processing payroll, and invoicing customers. In this situation, separation of duties is impossible.

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?

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

Processing controls include the following tests: Validation Sequence Data Reasonableness Completeness Describe what each control is designed to do.

It is possible for management to design an ideal and effective system of internal controls for example over the counting of the physical inventory.

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

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

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.

Controls that relate to a specific use of the IT system, such as the processing of sales or cash receipts, are called application controls.

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 Materiality

Assessing the Risk of Material Misstatement

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, Substantive Tests of Transactions, and Accounts Payable

Completing the Tests in the Acquisition and Payment Cycle: Verification of Selected Accounts

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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