Exam 6: Introduction to Internal Control Systems and Risk Management

The 2013 COSO Report identifies five components for an effective internal control system.Which of those five establishes the tone of a company and influences the control awareness of the company's employees?

When management of the sales department has the opportunity to override the system of internal controls of the accounting department, a weakness exists in

The sales department bookkeeper has been crediting house?account sales to her brother-in?law, an outside salesman.Commissions are paid on outside sales but not on house-account sales.This might have been prevented by requiring that:

A control procedure that may be established within the sales department of a company's marketing subsystem is the addition of the sales invoice amounts before these invoices are sent to the information processing subsystem.This control total of invoice amounts is called a:

The 2004 COSO ERM Report differs from the 2017 COSO ERM Report, in that the former adopted a components- and principles-based approach to risk management.

With respect to risk response strategies, which of the following would be a "risk avoidance" approach?

Control procedures that provide feedback to management regarding the achievement of operational efficiency and adherence to prescribed managerial policies are called:

Which of the following components from the 2017 COSO ERM Report would provide guidance on risk assessment and risk response activities?

A general rule that should be followed when developing control procedures for a company's assets is:

Which of the following fundamental concepts is stressed by the 2013 COSO Report?

Within COSO's 2017 ERM Report, Risk Governance and Culture represents the organization's tone toward the design, implementation, execution and oversight of risk management activities.

Which of the following statements is true regarding preventive control procedures and detective control procedures?

The voucher system requires that invoices be compared with receiving reports and express bills before a voucher is prepared and approved for payment.

_________________ describes the policies, plans, and procedures implemented by a firm to protect its assets.

Which one of the following methods for the distribution of employees' paychecks would provide the best internal control for the organization?

A responsibility that should be assigned to a specific employee and not shared jointly is that of:

The separation of duties control would not be violated if a company's cashier was also responsible for recording cash transactions.

With respect to COBIT 5, which of the following is true :

Due to data errors occurring from time to time in processing the Albert Company's payroll, the company's management is considering the addition of a data validation control procedure that is projected to reduce the risk of these data errors from 13% to 2%.The cost of the payroll reprocessing is estimated to be $11,000.If the data validation control procedure is implemented, the cost of this procedure is expected to be $700 per pay period (employees are paid biweekly).Based on the above data, which of the following statements is true?

Risk assessment is an important component of an internal control system.