Question 1

After obtaining an understanding of a client's financial reporting control activities,the auditor would next

Accepted Answer

A) test the client's control activities. 
B) assess the final control risk. 
C) document the understanding obtained. 
D) plan the remainder of the audit work. 
A) test the client's control activities. 
B) assess the final control risk. 
C) document the understanding obtained. 
D) plan the remainder of the audit work.

Question 2

Which of the following statements is correct regarding internal control?

Accepted Answer

A) A well-designed internal control environment ensures the achievement of an entity's control objectives. 
B) An inherent limitation to internal control is the fact that controls can be circumvented by management override. 
C) A well-designed and operated internal control environment should detect collusion perpetrated by two people. 
D) Internal control is a necessary business function and should be designed and operated to detect all errors and fraud. 
A) A well-designed internal control environment ensures the achievement of an entity's control objectives. 
B) An inherent limitation to internal control is the fact that controls can be circumvented by management override. 
C) A well-designed and operated internal control environment should detect collusion perpetrated by two people. 
D) Internal control is a necessary business function and should be designed and operated to detect all errors and fraud.

Question 3

The primary objective of procedures performed to obtain an understanding of the entity's internal control is to provide an auditor with

Accepted Answer

A) knowledge necessary for audit planning. 
B) evidential matter to use in assessing inherent risk. 
C) a basis for modifying tests of controls. 
D) an evaluation of the consistency of application of management's policies. 
A) knowledge necessary for audit planning. 
B) evidential matter to use in assessing inherent risk. 
C) a basis for modifying tests of controls. 
D) an evaluation of the consistency of application of management's policies.

Question 4

An auditor is evaluating a client's internal controls.Which of the following situations would be the most difficult internal control issue for an auditor to detect?

Accepted Answer

A) The accounting staff neglects the control,due to increased transactions to be processed. 
B) The technology department writes a program that does not properly implement the control,due to a lack of understanding. 
C) Two employees,who work in different departments,are circumventing an internal control. 
D) Someone erroneously disables edit checks in a software program designed to identify control exceptions. 
A) The accounting staff neglects the control,due to increased transactions to be processed. 
B) The technology department writes a program that does not properly implement the control,due to a lack of understanding. 
C) Two employees,who work in different departments,are circumventing an internal control. 
D) Someone erroneously disables edit checks in a software program designed to identify control exceptions.

Question 5

What is the difference between an internal control's design effectiveness and its operating effectiveness?

Accepted Answer

Design effectiveness determines whether

Question 6

Management's report on internal controls must include each of the following except

Accepted Answer

A) a statement that management is responsible for establishing and maintaining adequate internal control over financial reporting. 
B) a statement identifying the framework management uses to evaluate the effectiveness of the company's internal control. 
C) a statement providing management's assessment of the effectiveness of the company's internal control. 
D) a statement providing management's evaluation of the company's control environment. 
A) a statement that management is responsible for establishing and maintaining adequate internal control over financial reporting. 
B) a statement identifying the framework management uses to evaluate the effectiveness of the company's internal control. 
C) a statement providing management's assessment of the effectiveness of the company's internal control. 
D) a statement providing management's evaluation of the company's control environment.

Question 7

The "obtaining an understanding" work phase (Phase 1)of internal control evaluation would not give auditors an overall acquaintance with the client's

Accepted Answer

A) control environment. 
B) information and communication system. 
C) control activity effectiveness. 
D) monitoring activities. 
A) control environment. 
B) information and communication system. 
C) control activity effectiveness. 
D) monitoring activities.

After obtaining an understanding of a client's financial reporting control activities,the auditor would next

Which of the following statements is correct regarding internal control?

The primary objective of procedures performed to obtain an understanding of the entity's internal control is to provide an auditor with

An auditor is evaluating a client's internal controls.Which of the following situations would be the most difficult internal control issue for an auditor to detect?

What is the difference between an internal control's design effectiveness and its operating effectiveness?

Management's report on internal controls must include each of the following except

The "obtaining an understanding" work phase (Phase 1)of internal control evaluation would not give auditors an overall acquaintance with the client's

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 Audits, Governmental Audits, and Fraud Examinations

Overview of Sampling

Attributes Sampling

Variables Sampling

Auditing and Information Technology

Filters

Exam 5: Risk Assessment: Internal Control Evaluation

After obtaining an understanding of a client's financial reporting control activities,the auditor would next

Which of the following statements is correct regarding internal control?

The primary objective of procedures performed to obtain an understanding of the entity's internal control is to provide an auditor with

An auditor is evaluating a client's internal controls.Which of the following situations would be the most difficult internal control issue for an auditor to detect?

What is the difference between an internal control's design effectiveness and its operating effectiveness?

Management's report on internal controls must include each of the following except

The "obtaining an understanding" work phase (Phase 1)of internal control evaluation would not give auditors an overall acquaintance with the client's

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 Audits, Governmental Audits, and Fraud Examinations

Overview of Sampling

Attributes Sampling

Variables Sampling

Auditing and Information Technology

Filters