Exam 3: Internal Control Over Financial Reporting: Managements Responsibilities and Importance to the External Auditors

One of the components of internal control,the control environment,is considered pervasive and the auditor should start the evaluation of controls at this level.

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

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?

The five major components of an organization's internal control are: the control environment,risk assessment,control activities,information and communication,and monitoring.

Testing internal control for effectiveness is done in every audit.

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

Control environment One of the elements of an organization's control system is the "control environment." Identify at least four factors that the auditor should consider when reviewing the control environment and discuss how the auditor would relate this review to the assessment of control risk.

What is the auditor's responsibility for testing internal controls when the auditor believes that the internal controls are effective and intends to rely upon them?

The quality of an organization's internal controls affect which of the following?

Which of the following facts would result in an auditor issuing an adverse report over internal control?

A material weakness in internal control is a deficiency,or a combination of deficiencies,in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the company's annual or interim financial statements will not be prevented or detected on a timely basis.

The PCAOB's AS No.5 states that internal controls may be preventive or detective. Which of the following controls is preventive?

Managers must use professional judgment to determine whether identified control deficiencies rise to the level of a significant deficiency or material weakness.

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

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

With whom does the tone of internal control typically originate?

Which of the following is a detective control?

Preventative controls are designed to prevent the occurrence of a misstatement.

The auditor is obligated to report significant deficiencies in the control structure discovered during an audit to the audit committee or its equivalent.

A deficiency in design of internal controls exists when an existing control is not properly designed so that,even if the control operates as designed,the control objective would not be met.