Question 1

What is the primary benefit of effective internal control in an organization?

Accepted Answer

A) Achieving certain organizational goals. 
B) Completing a successful audit for the entity. 
C) Maximizing value for shareholders. 
D) Obtaining profitability and financial strength. 
A) Achieving certain organizational goals. 
B) Completing a successful audit for the entity. 
C) Maximizing value for shareholders. 
D) Obtaining profitability and financial strength.

Question 2

Which of the following groups is interested in an organization's control structure?

Accepted Answer

A) Board members. 
B) Lenders. 
C) Auditors. 
D) All of the above. 
A) Board members. 
B) Lenders. 
C) Auditors. 
D) All of the above.

Question 3

In addition to controls being specific,they may be broad,such as policies regarding a code of ethics.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following COSO components is the foundation for all other components of internal control?

Accepted Answer

A) Control risk assessment. 
B) Control environment. 
C) Information and communication. 
D) Monitoring. 
A) Control risk assessment. 
B) Control environment. 
C) Information and communication. 
D) Monitoring.

Question 5

An edit test is considered to be which type of control?

Accepted Answer

A) An input control. 
B) A processing control. 
C) An output control. 
D) A supporting control. 
A) An input control. 
B) A processing control. 
C) An output control. 
D) A supporting control.

Question 6

Generally,highly regulated entities have more complex control activities than less-regulated entities.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following is not a way management obtains evidence regarding the effectiveness of internal control over the accounting system?

Accepted Answer

A) Performing a walkthrough of the accounting system. 
B) Making inquiries of banks and attorneys. 
C) Reviewing system flowcharts. 
D) Taking plant and operational tours. 
A) Performing a walkthrough of the accounting system. 
B) Making inquiries of banks and attorneys. 
C) Reviewing system flowcharts. 
D) Taking plant and operational tours.

Question 8

Which of the following is considered to be a transaction control?

Accepted Answer

A) Controls to monitor other controls. 
B) Policies that address significant business control practices. 
C) Centralized processing controls. 
D) Physical controls to safeguard assets. 
A) Controls to monitor other controls. 
B) Policies that address significant business control practices. 
C) Centralized processing controls. 
D) Physical controls to safeguard assets.

Question 9

Which of the following best describes the purpose of personnel policies and procedures?

Accepted Answer

A) Ensure the organization hires the right people. 
B) Ensure the organization complies with federal and state laws in its hiring and retention decisions. 
C) Ensure the organization has employees that are properly trained and supervised. 
D) Ensure the organization performs all of the above. 
A) Ensure the organization hires the right people. 
B) Ensure the organization complies with federal and state laws in its hiring and retention decisions. 
C) Ensure the organization has employees that are properly trained and supervised. 
D) Ensure the organization performs all of the above.

Question 10

Which of the following is an example of a detective control in an information system?

Accepted Answer

A) Automated reports to management that specifically identify delinquent receivables. 
B) A requirement that salaried employees submit written requests to work overtime. 
C) Assurance from top management that computer centers are kept locked. 
D) The employment of trustworthy people to enter data into the information system. 
A) Automated reports to management that specifically identify delinquent receivables. 
B) A requirement that salaried employees submit written requests to work overtime. 
C) Assurance from top management that computer centers are kept locked. 
D) The employment of trustworthy people to enter data into the information system.

Question 11

Preventive controls are designed to provide reasonable assurance that the correct program is used for processing,all transactions are processed,and the transactions update appropriate files.

Accepted Answer

A) True 
 B)False

Question 12

Internal control helps an organization eliminate the risk of failing to provide users with reliable financial information.

Accepted Answer

A) True 
 B)False

Question 13

After identifying the risks of not achieving reliable financial reporting,management implements controls to provide reasonable assurance that material misstatements do not occur in the financial statements.

Accepted Answer

A) True 
 B)False

Question 14

When auditing the financial statements of a public company,the auditor is required to express an opinion on the company's internal controls whenever a material weakness in control is identified.

Accepted Answer

A) True 
 B)False

Question 15

Management is obligated to report significant deficiencies in the control structure in their annual report on internal control effectiveness required by the Sarbanes-Oxley Act.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following best represents a walkthrough?

Accepted Answer

A) The controller reviews the bank reconciliation prepared by the accountant and its resulting journal entries. 
B) The auditor walks the production line to find inefficiencies in the inventory process and reports them to management. 
C) The controller takes a sample of recorded write-offs to ensure they have been properly approved. 
D) The auditor traces three purchasing transactions from the purchase order to the financial statement for observation and understanding. 
A) The controller reviews the bank reconciliation prepared by the accountant and its resulting journal entries. 
B) The auditor walks the production line to find inefficiencies in the inventory process and reports them to management. 
C) The controller takes a sample of recorded write-offs to ensure they have been properly approved. 
D) The auditor traces three purchasing transactions from the purchase order to the financial statement for observation and understanding.

Question 17

Requiring the mail clerk to prepare a listing of all checks received,with copies of the list going to the cashier and to accounting,is an example of which type of control?

Accepted Answer

A) Preventive. 
B) Corrective. 
C) Detective. 
D) Directive. 
A) Preventive. 
B) Corrective. 
C) Detective. 
D) Directive.

Question 18

Management should test all internal controls for effectiveness when performing their annual evaluation of the internal control structure.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following is a major component of an organization's internal control structure?

Accepted Answer

A) Major new financing. 
B) The financial environment. 
C) Risk assessment. 
D) Telecommunication equipment. 
A) Major new financing. 
B) The financial environment. 
C) Risk assessment. 
D) Telecommunication equipment.

Question 20

Which one of the following is an example of an internal risk for an organization?

Accepted Answer

A) Changes in internal information technology. 
B) Increases in substitute services or products. 
C) Changes in the reliability of source goods. 
D) Changes in regulation that make the business model unsustainable. 
A) Changes in internal information technology. 
B) Increases in substitute services or products. 
C) Changes in the reliability of source goods. 
D) Changes in regulation that make the business model unsustainable.

What is the primary benefit of effective internal control in an organization?

Which of the following groups is interested in an organization's control structure?

In addition to controls being specific,they may be broad,such as policies regarding a code of ethics.

Which of the following COSO components is the foundation for all other components of internal control?

An edit test is considered to be which type of control?

Generally,highly regulated entities have more complex control activities than less-regulated entities.

Which of the following is not a way management obtains evidence regarding the effectiveness of internal control over the accounting system?

Which of the following is considered to be a transaction control?

Which of the following best describes the purpose of personnel policies and procedures?

Which of the following is an example of a detective control in an information system?

Preventive controls are designed to provide reasonable assurance that the correct program is used for processing,all transactions are processed,and the transactions update appropriate files.

Internal control helps an organization eliminate the risk of failing to provide users with reliable financial information.

After identifying the risks of not achieving reliable financial reporting,management implements controls to provide reasonable assurance that material misstatements do not occur in the financial statements.

When auditing the financial statements of a public company,the auditor is required to express an opinion on the company's internal controls whenever a material weakness in control is identified.

Management is obligated to report significant deficiencies in the control structure in their annual report on internal control effectiveness required by the Sarbanes-Oxley Act.

Which of the following best represents a walkthrough?

Requiring the mail clerk to prepare a listing of all checks received,with copies of the list going to the cashier and to accounting,is an example of which type of control?

Management should test all internal controls for effectiveness when performing their annual evaluation of the internal control structure.

Which of the following is a major component of an organization's internal control structure?

Which one of the following is an example of an internal risk for an organization?

Quality Auditing: Why It Matters

The Auditors Responsibilities Regarding Fraud and Mechanisms to Address Fraud: Regulation and Corporate Governance

Professional Legal Liability

Professional Auditing Standards and the Audit Opinion Formulation Process

Audit Evidence

Planning the Audit: Identifying and Responding to the Risks of Material Misstatement

Specialized Audit Tools: Sampling and Generalized Audit Software

Auditing the Revenue Cycle

Auditing Cash and Marketable Securities

Auditing Inventory, Goods and Services, and Accounts Payable: the Acquisition and Payment Cycle

Auditing Long-Lived Assets: Acquisition, Use, Impairment, and Disposal

Auditing Long-Term Liabilities and Stockholders Equity Transactions

Completing a Quality Audit

Audit Reports

Filters

Exam 3: Internal Control Over Financial Reporting: Responsibilities of Management and the External Auditor

What is the primary benefit of effective internal control in an organization?

Which of the following groups is interested in an organization's control structure?

In addition to controls being specific,they may be broad,such as policies regarding a code of ethics.

Which of the following COSO components is the foundation for all other components of internal control?

An edit test is considered to be which type of control?

Generally,highly regulated entities have more complex control activities than less-regulated entities.

Which of the following is not a way management obtains evidence regarding the effectiveness of internal control over the accounting system?

Which of the following is considered to be a transaction control?

Which of the following best describes the purpose of personnel policies and procedures?

Which of the following is an example of a detective control in an information system?

Preventive controls are designed to provide reasonable assurance that the correct program is used for processing,all transactions are processed,and the transactions update appropriate files.

Internal control helps an organization eliminate the risk of failing to provide users with reliable financial information.

After identifying the risks of not achieving reliable financial reporting,management implements controls to provide reasonable assurance that material misstatements do not occur in the financial statements.

When auditing the financial statements of a public company,the auditor is required to express an opinion on the company's internal controls whenever a material weakness in control is identified.

Management is obligated to report significant deficiencies in the control structure in their annual report on internal control effectiveness required by the Sarbanes-Oxley Act.

Which of the following best represents a walkthrough?

Requiring the mail clerk to prepare a listing of all checks received,with copies of the list going to the cashier and to accounting,is an example of which type of control?

Management should test all internal controls for effectiveness when performing their annual evaluation of the internal control structure.

Which of the following is a major component of an organization's internal control structure?

Which one of the following is an example of an internal risk for an organization?

Quality Auditing: Why It Matters

The Auditors Responsibilities Regarding Fraud and Mechanisms to Address Fraud: Regulation and Corporate Governance

Professional Legal Liability

Professional Auditing Standards and the Audit Opinion Formulation Process

Audit Evidence

Planning the Audit: Identifying and Responding to the Risks of Material Misstatement

Specialized Audit Tools: Sampling and Generalized Audit Software

Auditing the Revenue Cycle

Auditing Cash and Marketable Securities

Auditing Inventory, Goods and Services, and Accounts Payable: the Acquisition and Payment Cycle

Auditing Long-Lived Assets: Acquisition, Use, Impairment, and Disposal

Auditing Long-Term Liabilities and Stockholders Equity Transactions

Completing a Quality Audit

Audit Reports

Filters