Exam 9: Introduction to Internal Control Systems

Three objectives of a company's internal control system should be safeguarding assets, checking the accuracy and reliability of accounting data, and promoting operational efficiency.A fourth objective of a company's internal control system should be:

Control activities and monitoring are one and the same.

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:

Regarding COBIT, which of the following statements is true?

A company's control environment is unimportant when developing an internal control system.

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?

Which of the following control procedures provides physical protection for a company's cash asset?

Controls that attempt to safeguard asset resources are often called detective controls.

The 1992 COSO report identifies five components for an effective internal control system.Which of those five includes the methods used to inform employees about their roles and responsibilities pertaining to internal control?