Question 1

If auditors assess control risk at the maximum level,they will tend to

Accepted Answer

A)  Perform a great deal of additional tests of controls. 
B)  Perform a great deal of substantive testing during the audit. 
C)  Perform substantive tests at an interim date. 
D)  Perform more audit procedures using internal evidence. 
A)  Perform a great deal of additional tests of controls. 
B)  Perform a great deal of substantive testing during the audit. 
C)  Perform substantive tests at an interim date. 
D)  Perform more audit procedures using internal evidence.

Question 2

The audit team is responsible for designing an evaluation of _________________________ internal control systems and _____________________________ the control _____________________________ of that system.

Accepted Answer

existing;

Question 3

In an audit of financial statements,an auditor's primary consideration regarding an internal control policy or activity is whether the policy or activity

Accepted Answer

A)  Reflects management's philosophy and operating style. 
B)  Affects management's financial statement assertions. 
C)  Provides adequate safeguards over access to assets. 
D)  Enhances management's decision making processes. 
A)  Reflects management's philosophy and operating style. 
B)  Affects management's financial statement assertions. 
C)  Provides adequate safeguards over access to assets. 
D)  Enhances management's decision making processes.

Question 4

Auditors perform ________________________________ to determine how well the company's controls actually functioned during the period under audit.

Accepted Answer

The answer of Auditors perform ________________________________ to determine how well...

Question 5

Proper separation of duties reduces the opportunity for persons to be in positions to both

Accepted Answer

A)  Journalize entries and prepare financial statements. 
B)  Record cash receipts and cash disbursements. 
C)  Establish internal controls and authorize transactions. 
D)  Perpetrate a fraud and then conceal it in the books. 
A)  Journalize entries and prepare financial statements. 
B)  Record cash receipts and cash disbursements. 
C)  Establish internal controls and authorize transactions. 
D)  Perpetrate a fraud and then conceal it in the books.

Question 6

The appropriate separation of duties does not include

Accepted Answer

A)  Having authorization to execute transactions. 
B)  Recording transactions. 
C)  Having custody of assets involved in the transactions. 
D)  Preparing data. 
A)  Having authorization to execute transactions. 
B)  Recording transactions. 
C)  Having custody of assets involved in the transactions. 
D)  Preparing data.

Question 7

When completing the audit of internal controls for an issuer,the severity of an internal control deficiency depends on:

Accepted Answer

A)  Whether there is a reasonable possibility that the company's controls will fail to prevent or detect a misstatement of an account balance or disclosure. 
B)  Whether the account has a history of errors. 
C)  The magnitude of the potential misstatement resulting from the deficiency or the deficiencies. 
D)  Both A and C are correct. 
E)  All of the above are correct. 
A)  Whether there is a reasonable possibility that the company's controls will fail to prevent or detect a misstatement of an account balance or disclosure. 
B)  Whether the account has a history of errors. 
C)  The magnitude of the potential misstatement resulting from the deficiency or the deficiencies. 
D)  Both A and C are correct. 
E)  All of the above are correct.

Question 8

Which of the following is not an input control activity?

Accepted Answer

A)  Reasonableness tests. 
B)  Record counts. 
C)  Financial totals. 
D)  Hash totals. 
A)  Reasonableness tests. 
B)  Record counts. 
C)  Financial totals. 
D)  Hash totals.

Question 9

In an audit of financial statements of a nonpublic company in accordance with generally accepted auditing standards,an auditor is required to

Accepted Answer

A)  Document his or her understanding of the entity's internal control. 
B)  Search for significant deficiencies in the operation of internal controls. 
C)  Perform tests of controls to evaluate the effectiveness of the entity's accounting system. 
D)  Determine whether control activities are operating effectively to prevent or detect material misstatements. 
A)  Document his or her understanding of the entity's internal control. 
B)  Search for significant deficiencies in the operation of internal controls. 
C)  Perform tests of controls to evaluate the effectiveness of the entity's accounting system. 
D)  Determine whether control activities are operating effectively to prevent or detect material misstatements.

Question 10

According to the PCAOB,during the audit of internal controls for an issuer,the ultimate objective of testing the design effectiveness of internal controls is to

Accepted Answer

A)  Determine whether the company's controls are processing company data effectively. 
B)  Determine that the company's controls will satisfy the company's control objectives and can effectively prevent or detect errors or fraud that could result in material misstatements, if they operate as prescribed. 
C)  Determine that the company's employees are processing the controls according to the policy and procedure manuals at the company. 
D)  None of the above. 
A)  Determine whether the company's controls are processing company data effectively. 
B)  Determine that the company's controls will satisfy the company's control objectives and can effectively prevent or detect errors or fraud that could result in material misstatements, if they operate as prescribed. 
C)  Determine that the company's employees are processing the controls according to the policy and procedure manuals at the company. 
D)  None of the above.

Question 11

Which of the following is a device designed to help the audit team obtain evidence about the accounting and control activities of an audit client?

Accepted Answer

A)  A narrative memorandum describing the control system. 
B)  An internal control questionnaire. 
C)  A flowchart of the documents and procedures used by the company. 
D)  All of the above. 
A)  A narrative memorandum describing the control system. 
B)  An internal control questionnaire. 
C)  A flowchart of the documents and procedures used by the company. 
D)  All of the above.

Question 12

Which report would not be appropriate for a public accounting firm to provide on financial reporting controls?

Accepted Answer

A)  Unqualified-no material weaknesses found. 
B)  Disclaimer of opinion-unable to perform all necessary procedures. 
C)  Disclaimer of opinion-significant deficiencies exist. 
D)  Adverse-material weaknesses exist. 
A)  Unqualified-no material weaknesses found. 
B)  Disclaimer of opinion-unable to perform all necessary procedures. 
C)  Disclaimer of opinion-significant deficiencies exist. 
D)  Adverse-material weaknesses exist.

Question 13

When completing the audit of internal controls for an issuer,AS 5 requires auditors to test

Accepted Answer

A)  Operating effectiveness only. 
B)  Design effectiveness only. 
C)  Both operating and design effectiveness. 
D)  Neither operating nor design effectiveness 
A)  Operating effectiveness only. 
B)  Design effectiveness only. 
C)  Both operating and design effectiveness. 
D)  Neither operating nor design effectiveness

Question 14

Significant deficiencies in internal control also include the more serious condition called a ___________________________________.

Accepted Answer

The answer of Significant deficiencies in internal control also include...

Question 15

A report on internal control effectiveness by the management team of public companies is required by

Accepted Answer

A)  The Sarbanes-Oxley Act of 2002. 
B)  The PCAOB. 
C)  The AICPA. 
D)  The ASB. 
A)  The Sarbanes-Oxley Act of 2002. 
B)  The PCAOB. 
C)  The AICPA. 
D)  The ASB.

Question 16

A set of characteristics that helps to define a seriousness about employees' attitudes about the control activities in a company is referred to as

Accepted Answer

A)  Management assertions. 
B)  Control environment. 
C)  Control risk assessment. 
D)  Functional responsibilities. 
A)  Management assertions. 
B)  Control environment. 
C)  Control risk assessment. 
D)  Functional responsibilities.

Question 17

Which of the following areas can external auditors rely on internal auditors' work in auditing internal controls?

Accepted Answer

A)  Evaluation of the auditing environment. 
B)  Testing of low-risk internal control activities. 
C)  All testing of the operating effectiveness of internal control activities. 
D)  Providing the principal evidence for the external auditors' opinion. 
A)  Evaluation of the auditing environment. 
B)  Testing of low-risk internal control activities. 
C)  All testing of the operating effectiveness of internal control activities. 
D)  Providing the principal evidence for the external auditors' opinion.

Question 18

When completing the audit of internal controls for an issuer,the PCAOB requires auditors of public companies to audit internal controls over

Accepted Answer

A)  Operations. 
B)  Compliance with regulations. 
C)  Financial reporting. 
D)  All of the above. 
A)  Operations. 
B)  Compliance with regulations. 
C)  Financial reporting. 
D)  All of the above.

Question 19

A bridge workpaper shows the connection between

Accepted Answer

A)  Control evaluation findings and subsequent audit procedures. 
B)  Management objectives and accounting system procedures. 
C)  Management objectives and entity control activities. 
D)  Financial statement assertions and tests of controls. 
A)  Control evaluation findings and subsequent audit procedures. 
B)  Management objectives and accounting system procedures. 
C)  Management objectives and entity control activities. 
D)  Financial statement assertions and tests of controls.

Question 20

A material weakness is a situation in which

Accepted Answer

A)  It is probable that an immaterial financial statement misstatement would not be detected on a timely basis. 
B)  There is a remote likelihood that a material misstatement would be detected on a timely basis. 
C)  It is reasonably possible that a material misstatement would not be detected on a timely basis. 
D)  It is reasonably possible that an immaterial misstatement would not be detected on a timely basis. 
A)  It is probable that an immaterial financial statement misstatement would not be detected on a timely basis. 
B)  There is a remote likelihood that a material misstatement would be detected on a timely basis. 
C)  It is reasonably possible that a material misstatement would not be detected on a timely basis. 
D)  It is reasonably possible that an immaterial misstatement would not be detected on a timely basis.

If auditors assess control risk at the maximum level,they will tend to

The audit team is responsible for designing an evaluation of ___________ internal control systems and _ the control _______________ of that system.

In an audit of financial statements,an auditor's primary consideration regarding an internal control policy or activity is whether the policy or activity

Auditors perform ________________________________ to determine how well the company's controls actually functioned during the period under audit.

Proper separation of duties reduces the opportunity for persons to be in positions to both

The appropriate separation of duties does not include

When completing the audit of internal controls for an issuer,the severity of an internal control deficiency depends on:

Which of the following is not an input control activity?

In an audit of financial statements of a nonpublic company in accordance with generally accepted auditing standards,an auditor is required to

According to the PCAOB,during the audit of internal controls for an issuer,the ultimate objective of testing the design effectiveness of internal controls is to

Which of the following is a device designed to help the audit team obtain evidence about the accounting and control activities of an audit client?

Which report would not be appropriate for a public accounting firm to provide on financial reporting controls?

When completing the audit of internal controls for an issuer,AS 5 requires auditors to test

Significant deficiencies in internal control also include the more serious condition called a ___________________________________.

A report on internal control effectiveness by the management team of public companies is required by

A set of characteristics that helps to define a seriousness about employees' attitudes about the control activities in a company is referred to as

Which of the following areas can external auditors rely on internal auditors' work in auditing internal controls?

When completing the audit of internal controls for an issuer,the PCAOB requires auditors of public companies to audit internal controls over

A bridge workpaper shows the connection between

A material weakness is a situation in which

Auditing and Assurance Services

Professional Standards

Engagement Planning

Management Fraud and Audit Risk

Employee Fraud and the Audit of Cash

Revenue and Collection Cycle

Acquisition and Expenditure Cycle

Production Cycle

Finance and Investment Cycle

Completing the Audit

Reports on Audited Financial Statements

Other Public Accounting Services

Professional Ethics

Legal Liability

Internal Governmental and Fraud Audits

Overview of Sampling

Attributes Sampling

Variables Sampling

Auditing in a Computerized Environment

Filters

Exam 5: Risk Assessment: Internal Control Evaluation

If auditors assess control risk at the maximum level,they will tend to

The audit team is responsible for designing an evaluation of _________________________ internal control systems and _____________________________ the control _____________________________ of that system.

In an audit of financial statements,an auditor's primary consideration regarding an internal control policy or activity is whether the policy or activity

Auditors perform ________________________________ to determine how well the company's controls actually functioned during the period under audit.

Proper separation of duties reduces the opportunity for persons to be in positions to both

The appropriate separation of duties does not include

When completing the audit of internal controls for an issuer,the severity of an internal control deficiency depends on:

Which of the following is not an input control activity?

In an audit of financial statements of a nonpublic company in accordance with generally accepted auditing standards,an auditor is required to

According to the PCAOB,during the audit of internal controls for an issuer,the ultimate objective of testing the design effectiveness of internal controls is to

Which of the following is a device designed to help the audit team obtain evidence about the accounting and control activities of an audit client?

Which report would not be appropriate for a public accounting firm to provide on financial reporting controls?

When completing the audit of internal controls for an issuer,AS 5 requires auditors to test

Significant deficiencies in internal control also include the more serious condition called a ___________________________________.

A report on internal control effectiveness by the management team of public companies is required by

A set of characteristics that helps to define a seriousness about employees' attitudes about the control activities in a company is referred to as

Which of the following areas can external auditors rely on internal auditors' work in auditing internal controls?

When completing the audit of internal controls for an issuer,the PCAOB requires auditors of public companies to audit internal controls over

A bridge workpaper shows the connection between

A material weakness is a situation in which

Auditing and Assurance Services

Professional Standards

Engagement Planning

Management Fraud and Audit Risk

Employee Fraud and the Audit of Cash

Revenue and Collection Cycle

Acquisition and Expenditure Cycle

Production Cycle

Finance and Investment Cycle

Completing the Audit

Reports on Audited Financial Statements

Other Public Accounting Services

Professional Ethics

Legal Liability

Internal Governmental and Fraud Audits

Overview of Sampling

Attributes Sampling

Variables Sampling

Auditing in a Computerized Environment

Filters

The audit team is responsible for designing an evaluation of ___________ internal control systems and _ the control _______________ of that system.