Question 1

The Sarbanes-Oxley Act requires the audit committee to hire and oversee the external auditors.

Accepted Answer

A) True 
 B)False  True

Question 2

In this age of high technology and computer based information systems, why are accountants concerned about physical (human) controls?

Accepted Answer

Virtually all systems, regardless of their sophistication, employ human activities that need to be controlled. This class of controls relates primarily to the human activities employed in accounting systems. These activities may be purely manual, such as the physical custody of assets, or they may involve the use of computers to record transactions or update accounts. Physical controls do not relate to the computer logic that actually performs these accounting tasks. Rather, they relate to the human activities that initiate such computer logic. In other words, physical controls do not suggest an environment in which clerks update paper accounts with pen and ink.

Question 3

The external auditor is responsible for establishing and maintaining the internal control system.

Accepted Answer

A) True 
 B)False  False

Question 4

Section 404 requires management to make a statement identifying the control framework used to conduct their assessment of internal controls. Discuss the options in selecting a control framework.

Accepted Answer

The SEC has made specific reference to t

Question 5

What are the key points of the "Issuer and Management Disclosure" of the Sarbanes-Oxley Act?

Accepted Answer

1. Public companies must report all off

Question 6

External auditors can cooperate with and use evidence gathered by internal audit departments that are organizationally independent and that report to the Audit Committee of the Board of Directors.

Accepted Answer

A) True 
 B)False

Question 7

Internal auditors assist external auditors with financial audits to

Accepted Answer

A)  reduce audit fees 
B)  ensure independence 
C)  represent the interests of management 
D)  the statement is not true; internal auditors are not permitted to assist external auditors with financial audits 
A)  reduce audit fees 
B)  ensure independence 
C)  represent the interests of management 
D)  the statement is not true; internal auditors are not permitted to assist external auditors with financial audits

Question 8

Explain the purpose of the PCAOB

Accepted Answer

The PCAOB is empowered to set

Question 9

Both the SEC and the PCAOB require management to use the COBIT framework for assessing internal control adequacy.

Accepted Answer

A) True 
 B)False

Question 10

The same internal control objectives apply to manual and computer-based information systems.

Accepted Answer

A) True 
 B)False

Question 11

Substantive testing techniques provide information about the accuracy and completeness of an application's processes.

Accepted Answer

A) True 
 B)False

Question 12

Use the internal control procedures listed below to complete statements.
 $\begin{array}{lccc}
\text { segregation of duties} &  \text { specitic authorization}\
\text { general authorization} & \text { accounting records}\
\text { access controls} & \text { independent verification.}\
\text { supervision}\
\end{array}$

-Locking petty cash in a safe is an example of __________________________.

Accepted Answer

The answer of Use the internal control procedures listed below...

Question 13

Internal control in a computerized environment can be divided into two broad categories. What are they? Explain each.

Accepted Answer

Internal controls can be divided into tw

Question 14

All of the following are steps in an IT audit except

Accepted Answer

A)  substantive testing 
B)  tests of controls 
C)  post-audit testing 
D)  audit planning 
A)  substantive testing 
B)  tests of controls 
C)  post-audit testing 
D)  audit planning

Question 15

Which of the following is not a limitation of the internal control system?

Accepted Answer

A)  errors are made due to employee fatigue 
B)  fraud occurs because of collusion between two employees 
C)  the industry is inherently risky 
D)  management instructs the bookkeeper to make fraudulent journal entries 
A)  errors are made due to employee fatigue 
B)  fraud occurs because of collusion between two employees 
C)  the industry is inherently risky 
D)  management instructs the bookkeeper to make fraudulent journal entries

Question 16

All of the following are components of audit risk except

Accepted Answer

A)  control risk 
B)  legal risk 
C)  detection risk 
D)  inherent risk 
A)  control risk 
B)  legal risk 
C)  detection risk 
D)  inherent risk

Question 17

Which of the following is a preventive control?

Accepted Answer

A)  credit check before approving a sale on account 
B)  bank reconciliation 
C)  physical inventory count 
D)  comparing the accounts receivable subsidiary ledger to the control account 
A)  credit check before approving a sale on account 
B)  bank reconciliation 
C)  physical inventory count 
D)  comparing the accounts receivable subsidiary ledger to the control account

Question 18

Which of the following situations is not a segregation of duties violation?

Accepted Answer

A)  The treasurer has the authority to sign checks but gives the signature block to the assistant treasurer to run the check-signing machine. 
B)  The warehouse clerk, who has the custodial responsibility over inventory in the warehouse, selects the vendor and authorizes purchases when inventories are low. 
C)  The sales manager has the responsibility to approve credit and the authority to write off accounts. 
D)  The department time clerk is given the undistributed payroll checks to mail to absent employees. 
E)  The accounting clerk who shares the record keeping responsibility for the accounts receivable subsidiary ledger performs the monthly reconciliation of the subsidiary ledger and the control account. 
A)  The treasurer has the authority to sign checks but gives the signature block to the assistant treasurer to run the check-signing machine. 
B)  The warehouse clerk, who has the custodial responsibility over inventory in the warehouse, selects the vendor and authorizes purchases when inventories are low. 
C)  The sales manager has the responsibility to approve credit and the authority to write off accounts. 
D)  The department time clerk is given the undistributed payroll checks to mail to absent employees. 
E)  The accounting clerk who shares the record keeping responsibility for the accounts receivable subsidiary ledger performs the monthly reconciliation of the subsidiary ledger and the control account.

Question 19

Distinguish between inherent risk and control risk. How do internal controls and detection risk fit in?

Accepted Answer

Inherent risk is associated with the uni

Question 20

Discuss the advisory services that external auditors are no longer permitted to render to audit clients under SOX legislation.

Accepted Answer

The Act addresses auditor independence b

The Sarbanes-Oxley Act requires the audit committee to hire and oversee the external auditors.

In this age of high technology and computer based information systems, why are accountants concerned about physical (human) controls?

The external auditor is responsible for establishing and maintaining the internal control system.

Section 404 requires management to make a statement identifying the control framework used to conduct their assessment of internal controls. Discuss the options in selecting a control framework.

What are the key points of the "Issuer and Management Disclosure" of the Sarbanes-Oxley Act?

External auditors can cooperate with and use evidence gathered by internal audit departments that are organizationally independent and that report to the Audit Committee of the Board of Directors.

Internal auditors assist external auditors with financial audits to

Explain the purpose of the PCAOB

Both the SEC and the PCAOB require management to use the COBIT framework for assessing internal control adequacy.

The same internal control objectives apply to manual and computer-based information systems.

Substantive testing techniques provide information about the accuracy and completeness of an application's processes.

Use the internal control procedures listed below to complete statements. segregation of duties specitic authorization general authorization accounting records access controls independent verification. supervision -Locking petty cash in a safe is an example of __________________________.

Internal control in a computerized environment can be divided into two broad categories. What are they? Explain each.

All of the following are steps in an IT audit except

Which of the following is not a limitation of the internal control system?

All of the following are components of audit risk except

Which of the following is a preventive control?

Which of the following situations is not a segregation of duties violation?

Distinguish between inherent risk and control risk. How do internal controls and detection risk fit in?

Discuss the advisory services that external auditors are no longer permitted to render to audit clients under SOX legislation.

Auditing IT Governance Controls

Auditing Operating Systems and Networks

Auditing Database Systems

Systems Development and Program Change Activities

Transaction Processing and Financial Reporting Systems Overview

Computer Assisted Audit Tools and Techniques

Data Structures and Caatts for Data Extraction

Auditing the Revenue Cycle

Auditing the Expenditure Cycle

Enterprise Resource Planning Systems

Business Ethics, Fraud, and Fraud Detection

Filters

Exam 1: Auditing and Internal Control

The Sarbanes-Oxley Act requires the audit committee to hire and oversee the external auditors.

In this age of high technology and computer based information systems, why are accountants concerned about physical (human) controls?

The external auditor is responsible for establishing and maintaining the internal control system.

Section 404 requires management to make a statement identifying the control framework used to conduct their assessment of internal controls. Discuss the options in selecting a control framework.

What are the key points of the "Issuer and Management Disclosure" of the Sarbanes-Oxley Act?

External auditors can cooperate with and use evidence gathered by internal audit departments that are organizationally independent and that report to the Audit Committee of the Board of Directors.

Internal auditors assist external auditors with financial audits to

Explain the purpose of the PCAOB

Both the SEC and the PCAOB require management to use the COBIT framework for assessing internal control adequacy.

The same internal control objectives apply to manual and computer-based information systems.

Substantive testing techniques provide information about the accuracy and completeness of an application's processes.

Use the internal control procedures listed below to complete statements. segregation of duties specitic authorization general authorization accounting records access controls independent verification. supervision -Locking petty cash in a safe is an example of __________________________.

Internal control in a computerized environment can be divided into two broad categories. What are they? Explain each.

All of the following are steps in an IT audit except

Which of the following is not a limitation of the internal control system?

All of the following are components of audit risk except

Which of the following is a preventive control?

Which of the following situations is not a segregation of duties violation?

Distinguish between inherent risk and control risk. How do internal controls and detection risk fit in?

Discuss the advisory services that external auditors are no longer permitted to render to audit clients under SOX legislation.

Auditing IT Governance Controls

Auditing Operating Systems and Networks

Auditing Database Systems

Systems Development and Program Change Activities

Transaction Processing and Financial Reporting Systems Overview

Computer Assisted Audit Tools and Techniques

Data Structures and Caatts for Data Extraction

Auditing the Revenue Cycle

Auditing the Expenditure Cycle

Enterprise Resource Planning Systems

Business Ethics, Fraud, and Fraud Detection

Filters