Question 1

Which statement is not correct?

Accepted Answer

A)  Auditors gather evidence using tests of controls and substantive tests. 
B)  The most important element in determining the level of materiality is the mathematical formula. 
C)  Auditors express an opinion in their audit report. 
D)  Auditors compare evidence to established criteria. 
A)  Auditors gather evidence using tests of controls and substantive tests. 
B)  The most important element in determining the level of materiality is the mathematical formula. 
C)  Auditors express an opinion in their audit report. 
D)  Auditors compare evidence to established criteria.

Question 2

The importance to the accounting profession of the Sarbanes-Oxely Act is that

Accepted Answer

A)  bribery will be eliminated 
B)  management will not override the company's internal controls 
C)  management are required to certify their internal control system 
D)  firms will not be exposed to lawsuits 
A)  bribery will be eliminated 
B)  management will not override the company's internal controls 
C)  management are required to certify their internal control system 
D)  firms will not be exposed to lawsuits

Question 3

A well-designed purchase order is an example of a

Accepted Answer

A)  preventive control 
B)  detective control 
C)  corrective control 
D)  none of the above 
A)  preventive control 
B)  detective control 
C)  corrective control 
D)  none of the above

Question 4

Internal control system have limitations. These include all of the following except

Accepted Answer

A)  possibility of honest error 
B)  circumvention 
C)  management override 
D)  stability of systems 
A)  possibility of honest error 
B)  circumvention 
C)  management override 
D)  stability of systems

Question 5

Indicate whether each procedure is a preventive or detective control.
a. authorizing a credit sale $ \quad $  $ \quad $ Preventive $ \quad $  $ \quad $ Detective
b. preparing a bank reconciliation $ \quad $ Preventive  $ \quad $ Detective
c. locking the warehouse $ \quad $ $ \quad $ $ \quad $ Preventive  $ \quad $ Detective
d. preparing a trial balance$ \quad $ $ \quad $ $ \quad $ Preventive $ \quad $ Detective
e. counting inventory$ \quad $ $ \quad $ $ \quad $ $ \quad $ Preventive $ \quad $ Detective

Accepted Answer

A. preventive; B. de

Question 6

Explain the purpose of the PCAOB.

Accepted Answer

The Sarbanes-Oxley Act creates a Public

Question 7

A physical inventory count is an example of a

Accepted Answer

A)  preventive control 
B)  detective control 
C)  corrective control 
D)  Feed-forward control 
A)  preventive control 
B)  detective control 
C)  corrective control 
D)  Feed-forward control

Question 8

The office manager forgot to record in the accounting records the daily bank deposit. Which control procedure would most likely prevent or detect this error?

Accepted Answer

A)  segregation of duties 
B)  independent verification 
C)  accounting records 
D)  supervision 
A)  segregation of duties 
B)  independent verification 
C)  accounting records 
D)  supervision

Question 9

External auditing is an independent appraisal function established within an organization to examine and evaluate its activities as a service to the organization.

Accepted Answer

A) True 
 B)False

Question 10

Does a qualified opinion on management's assessment of internal controls over the financial reporting system necessitate a qualified opinion on the financial statements? Explain.

Accepted Answer

No. Auditors are permitted to simultaneo

Question 11

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

-A clerk reorders 250 items when the inventory falls below 25 items. This is an example of __________________________.

Accepted Answer

general au

Question 12

Tests of controls determine whether the database contents fairly reflect the organization's transactions.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following is not an internal control procedure?

Accepted Answer

A)  authorization 
B)  management's operating style 
C)  independent verification 
D)  accounting records 
A)  authorization 
B)  management's operating style 
C)  independent verification 
D)  accounting records

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

An IT auditor expresses an opinion on the fairness of the financial statements.

Accepted Answer

A) True 
 B)False

Question 16

Which statement is not true?

Accepted Answer

A)  Auditors must maintain independence. 
B)  IT auditors attest to the integrity of the computer system. 
C)  IT auditing is independent of the general financial audit. 
D)  IT auditing can be performed by both external and internal auditors. 
A)  Auditors must maintain independence. 
B)  IT auditors attest to the integrity of the computer system. 
C)  IT auditing is independent of the general financial audit. 
D)  IT auditing can be performed by both external and internal auditors.

Question 17

Which of the following is the best reason to separate duties in a manual system?

Accepted Answer

A)  to avoid collusion between the programmer and the computer operator 
B)  to ensure that supervision is not required 
C)  to prevent the record keeper from authorizing transactions 
D)  to enable the firm to function more efficiently 
A)  to avoid collusion between the programmer and the computer operator 
B)  to ensure that supervision is not required 
C)  to prevent the record keeper from authorizing transactions 
D)  to enable the firm to function more efficiently

Question 18

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

-Using cameras to monitor the activities of cashiers is an example of __________________________.

Accepted Answer

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

Question 19

Segregation of duties is an example of an internal control procedure.

Accepted Answer

A) True 
 B)False

Question 20

Define general controls.

Accepted Answer

General controls apply to all systems. T

Which statement is not correct?

The importance to the accounting profession of the Sarbanes-Oxely Act is that

A well-designed purchase order is an example of a

Internal control system have limitations. These include all of the following except

Explain the purpose of the PCAOB.

A physical inventory count is an example of a

The office manager forgot to record in the accounting records the daily bank deposit. Which control procedure would most likely prevent or detect this error?

External auditing is an independent appraisal function established within an organization to examine and evaluate its activities as a service to the organization.

Does a qualified opinion on management's assessment of internal controls over the financial reporting system necessitate a qualified opinion on the financial statements? Explain.

Tests of controls determine whether the database contents fairly reflect the organization's transactions.

Which of the following is not an internal control procedure?

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

An IT auditor expresses an opinion on the fairness of the financial statements.

Which statement is not true?

Which of the following is the best reason to separate duties in a manual system?

Segregation of duties is an example of an internal control procedure.

Define general controls.

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

Which statement is not correct?

The importance to the accounting profession of the Sarbanes-Oxely Act is that

A well-designed purchase order is an example of a

Internal control system have limitations. These include all of the following except

Explain the purpose of the PCAOB.

A physical inventory count is an example of a

The office manager forgot to record in the accounting records the daily bank deposit. Which control procedure would most likely prevent or detect this error?

External auditing is an independent appraisal function established within an organization to examine and evaluate its activities as a service to the organization.

Does a qualified opinion on management's assessment of internal controls over the financial reporting system necessitate a qualified opinion on the financial statements? Explain.

Tests of controls determine whether the database contents fairly reflect the organization's transactions.

Which of the following is not an internal control procedure?

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

An IT auditor expresses an opinion on the fairness of the financial statements.

Which statement is not true?

Which of the following is the best reason to separate duties in a manual system?

Segregation of duties is an example of an internal control procedure.

Define general controls.

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