Question 1

Self-checking digit algorithms have been developed to test for transposition errors associated with identification numbers.

Accepted Answer

A) True 
 B)False

Question 2

An external auditor provides a separate opinion on the effectiveness of internal control for large publicly traded companies.

Accepted Answer

A) True 
 B)False

Question 3

When the auditor believes the design of controls of a non-public company is effective but does not test the controls,the auditor can assess control risk as moderate in some circumstances but otherwise it should be assessed as high.

Accepted Answer

A) True 
 B)False

Question 4

The PCAOB,in Auditing Standard No.5,indicates that auditors should use a "bottom-up approach" that begins at the financial statement level.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following is not true of internal control as defined by COSO?

Accepted Answer

A)  it is narrower than internal control over financial reporting.
B)  it is a process that includes all elements of internal control working together.
C)  it includes all the people in the organization.
D)  it starts at the top of the organization in setting a tone.E) B) and C)
F) C) and D)

Question 6

Understanding internal control
The auditor identifies four phases or steps in the control risk assessment procedure.Phase I involves obtaining an understanding of the internal control structure.Identify at least four methods the auditor might use in gathering the information and briefly describe each one.

Accepted Answer

Methods for obtaining an understanding o...

Question 7

Integrated audit
Explain the application of an integrated audit as it relates to regulation.Discuss the reasons that this integrated approach may occur.

Accepted Answer

The Sarbanes-Oxley Act of 2002 requires ...

Question 8

Monitoring of the internal controls involves assessment by appropriate personnel of the design and operation of controls on a timely basis and taking necessary actions.

Accepted Answer

A) True 
 B)False  True

Question 9

The payroll department should be responsible for signing payroll checks.

Accepted Answer

A) True 
 B)False

Question 10

COSO: A Framework for Internal Control
What is internal control as defined by COSO? Also explain,the other elements of the definition that are important to internal control

Accepted Answer

COSO defines internal control as a process,effected by an entity's board of directors,management,and other personnel,designed to provide reasonable assurance regarding the achievement of objectives in the following categories:
(1)reliability of financial reporting,
(2)compliance with applicable laws and regulations,and
(3)effectiveness and efficiency of operations.
The other elements of the definition that are important.They state that internal control:
* Is a process designed to accomplish the organization's objectives.
* Starts at the top of the organization with the board of directors and management creating and reinforcing a structure and a tone for controls in the organization.
* Directly or indirectly includes all people in the organization,ranging from the shipping clerk to the internal auditor to the chief financial officer.
* Is broader than internal control over financial reporting.

Question 11

When control risk is assessed at a maximum level,the auditor assumes that the internal controls are reliable in preventing or detecting material misstatements.

Accepted Answer

A) True 
 B)False

Question 12

There is a high risk,as well as a history,that fraud is instituted through which of the following:

Accepted Answer

A)  adjusting entries.
B)  closing entries.
C)  unusual journal entries.
D)  all of the above.E) B) and C)
F) All of the above

Question 13

Transaction oriented controls are designed to operate on every transaction throughout the year.

Accepted Answer

A) True 
 B)False

Question 14

Weakness in the tone at the top have been associated with most financial frauds during the past decade.

Accepted Answer

A) True 
 B)False

Question 15

Internal control is a process affected by the organization's board of directors,management,and other personnel to provide reasonable assurance of achieving certain objectives.Which of the following does not fit into one of these categories of objectives?

Accepted Answer

A)  reliability of financial reporting.
B)  compliance with laws and regulations.
C)  continuing existence.
D)  effectiveness and efficiency of operations.E) A) and B)
F) B) and C)

Question 16

The PCAOB requires auditors of public companies to perform

Accepted Answer

A)  a financial statement audit and an attest audit.
B)  a financial statement audit and an assurance audit.
C)  a financial statement audit and agreed upon procedures.
D)  a financial statement audit and an audit of internal control.E) A) and B)
F) A) and D) D

Question 17

Internal control is a process designed to achieve objectives in which one of the following categories?

Accepted Answer

A)  reliability of financial reporting
B)  compliance with applicable laws
C)  ineffectiveness of operations
D)  both A and BE) A) and B)
F) All of the above

Question 18

A graphic representation of an accounting application that normally identifies key controls that are effective in achieving specific control policies and procedures is:

Accepted Answer

A)  an internal control questionnaire.
B)  a flowchart.
C)  an internal control narrative.
D)  a walk-through.E) A) and C)
F) A) and B)

Question 19

The quality of an organization's internal control will affect both the audit approach and the amount of testing needed for an engagement.

Accepted Answer

A) True 
 B)False

Question 20

Personnel policies and procedures are designed to ensure that the organization

Accepted Answer

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

Exam 5: Internal Control Over Financial Reporting

Self-checking digit algorithms have been developed to test for transposition errors associated with identification numbers.

Correct Answer
verified

An external auditor provides a separate opinion on the effectiveness of internal control for large publicly traded companies.

Correct Answer
verified

When the auditor believes the design of controls of a non-public company is effective but does not test the controls,the auditor can assess control risk as moderate in some circumstances but otherwise it should be assessed as high.

Correct Answer
verified

The PCAOB,in Auditing Standard No.5,indicates that auditors should use a "bottom-up approach" that begins at the financial statement level.

Correct Answer
verified

Which of the following is not true of internal control as defined by COSO?

Correct Answer
verified

Correct Answer
verified
Methods for obtaining an understanding o...
View Answer

Integrated audit Explain the application of an integrated audit as it relates to regulation.Discuss the reasons that this integrated approach may occur.

Correct Answer
verified
The Sarbanes-Oxley Act of 2002 requires ...
View Answer

Monitoring of the internal controls involves assessment by appropriate personnel of the design and operation of controls on a timely basis and taking necessary actions.

Correct Answer
verified
True

The payroll department should be responsible for signing payroll checks.

Correct Answer
verified

COSO: A Framework for Internal Control What is internal control as defined by COSO? Also explain,the other elements of the definition that are important to internal control

When control risk is assessed at a maximum level,the auditor assumes that the internal controls are reliable in preventing or detecting material misstatements.

Correct Answer
verified

There is a high risk,as well as a history,that fraud is instituted through which of the following:

Correct Answer
verified

Transaction oriented controls are designed to operate on every transaction throughout the year.

Correct Answer
verified

Weakness in the tone at the top have been associated with most financial frauds during the past decade.

Correct Answer
verified

Internal control is a process affected by the organization's board of directors,management,and other personnel to provide reasonable assurance of achieving certain objectives.Which of the following does not fit into one of these categories of objectives?

Correct Answer
verified

The PCAOB requires auditors of public companies to perform

Correct Answer
verified
D

Internal control is a process designed to achieve objectives in which one of the following categories?

Correct Answer
verified

A graphic representation of an accounting application that normally identifies key controls that are effective in achieving specific control policies and procedures is:

Correct Answer
verified

The quality of an organization's internal control will affect both the audit approach and the amount of testing needed for an engagement.

Correct Answer
verified

Personnel policies and procedures are designed to ensure that the organization

Correct Answer
verified

Exam 5: Internal Control Over Financial Reporting

Self-checking digit algorithms have been developed to test for transposition errors associated with identification numbers.

Correct AnswerverifiedShow Answer

An external auditor provides a separate opinion on the effectiveness of internal control for large publicly traded companies.

Correct AnswerverifiedShow Answer

When the auditor believes the design of controls of a non-public company is effective but does not test the controls,the auditor can assess control risk as moderate in some circumstances but otherwise it should be assessed as high.

Correct AnswerverifiedShow Answer

The PCAOB,in Auditing Standard No.5,indicates that auditors should use a "bottom-up approach" that begins at the financial statement level.

Correct AnswerverifiedShow Answer

Which of the following is not true of internal control as defined by COSO?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedMethods for obtaining an understanding o...View AnswerShow Answer

Integrated audit Explain the application of an integrated audit as it relates to regulation.Discuss the reasons that this integrated approach may occur.

Correct AnswerverifiedThe Sarbanes-Oxley Act of 2002 requires ...View AnswerShow Answer

Monitoring of the internal controls involves assessment by appropriate personnel of the design and operation of controls on a timely basis and taking necessary actions.

Correct AnswerverifiedTrue

The payroll department should be responsible for signing payroll checks.

Correct AnswerverifiedShow Answer

COSO: A Framework for Internal Control What is internal control as defined by COSO? Also explain,the other elements of the definition that are important to internal control

When control risk is assessed at a maximum level,the auditor assumes that the internal controls are reliable in preventing or detecting material misstatements.

Correct AnswerverifiedShow Answer

There is a high risk,as well as a history,that fraud is instituted through which of the following:

Correct AnswerverifiedShow Answer

Transaction oriented controls are designed to operate on every transaction throughout the year.

Correct AnswerverifiedShow Answer

Weakness in the tone at the top have been associated with most financial frauds during the past decade.

Correct AnswerverifiedShow Answer

Internal control is a process affected by the organization's board of directors,management,and other personnel to provide reasonable assurance of achieving certain objectives.Which of the following does not fit into one of these categories of objectives?

Correct AnswerverifiedShow Answer

The PCAOB requires auditors of public companies to perform

Correct AnswerverifiedD

Internal control is a process designed to achieve objectives in which one of the following categories?

Correct AnswerverifiedShow Answer

A graphic representation of an accounting application that normally identifies key controls that are effective in achieving specific control policies and procedures is:

Correct AnswerverifiedShow Answer

The quality of an organization's internal control will affect both the audit approach and the amount of testing needed for an engagement.

Correct AnswerverifiedShow Answer

Personnel policies and procedures are designed to ensure that the organization

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Methods for obtaining an understanding o...
View Answer

Correct Answer
verified
The Sarbanes-Oxley Act of 2002 requires ...
View Answer

Correct Answer
verified
True

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
D

Correct Answer
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Correct Answer
verified

Correct Answer
verified

Correct Answer
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