Question 1

Typically, internal auditors perform all of the following tasks except

Accepted Answer

A)  Fraud detection 
B)  evaluation of operational efficiency 
C)  review of compliance with legal obligations 
D)  internal auditors perform all of the above tasks 
A)  Fraud detection 
B)  evaluation of operational efficiency 
C)  review of compliance with legal obligations 
D)  internal auditors perform all of the above tasks

Question 2

Explain the relationship between internal controls and substantive testing.

Accepted Answer

The stronger the int

Question 3

Audit risk is the probability that the auditor will render an unqualified opinion on financial statements that are materially misstated.

Accepted Answer

A) True 
 B)False

Question 4

Discuss the key features of Section 302 of the Sarbanes-Oxley Act.

Accepted Answer

Section 302 requires corporate managemen

Question 5

The most cost-effective type of internal control is

Accepted Answer

A)  preventive control 
B)  accounting control 
C)  detective control 
D)  corrective control 
A)  preventive control 
B)  accounting control 
C)  detective control 
D)  corrective control

Question 6

Section 302 requires the management of public companies to assess and formally report on the effectiveness of their organization's internal controls.

Accepted Answer

A) True 
 B)False

Question 7

Section 404 requires that corporate management (including the CEO) certify their organization's internal controls on a quarterly and annual basis.

Accepted Answer

A) True 
 B)False

Question 8

Control risk is

Accepted Answer

A)  the probability that the auditor will render an unqualified opinion on financial statements that are materially misstated 
B)  associated with the unique characteristics of the business or industry of the client 
C)  the likelihood that the control structure is flawed because controls are either absent or inadequate to prevent or detect errors in the accounts 
D)  the risk that auditors are willing to take that errors not detected or prevented by the control structure will also not be detected by the auditor 
A)  the probability that the auditor will render an unqualified opinion on financial statements that are materially misstated 
B)  associated with the unique characteristics of the business or industry of the client 
C)  the likelihood that the control structure is flawed because controls are either absent or inadequate to prevent or detect errors in the accounts 
D)  the risk that auditors are willing to take that errors not detected or prevented by the control structure will also not be detected by the auditor

Question 9

A qualified opinion on management's assessment of internal controls over the financial reporting system necessitates a qualified opinion on the financial statements?

Accepted Answer

A) True 
 B)False

Question 10

Inherent risk

Accepted Answer

A)  exists because all control structures are flawed in some ways. 
B)  is the likelihood that material misstatements exist in the financial statements of the firm. 
C)  is associated with the unique characteristics of the business or industry of the client. 
D)  is the likelihood that the auditor will not find material misstatements. 
A)  exists because all control structures are flawed in some ways. 
B)  is the likelihood that material misstatements exist in the financial statements of the firm. 
C)  is associated with the unique characteristics of the business or industry of the client. 
D)  is the likelihood that the auditor will not find material misstatements.

Question 11

COSO identifies two broad groupings of information system controls. What are they?

Accepted Answer

general; a

Question 12

What are the objectives of application controls?

Accepted Answer

The objectives of application

Question 13

Which of the following indicates a strong internal control environment?

Accepted Answer

A)  the internal audit group reports to the audit committee of the board of directors 
B)  there is no segregation of duties between organization functions 
C)  there are questions about the integrity of management 
D)  adverse business conditions exist in the industry 
A)  the internal audit group reports to the audit committee of the board of directors 
B)  there is no segregation of duties between organization functions 
C)  there are questions about the integrity of management 
D)  adverse business conditions exist in the industry

Question 14

Advisory services is an emerging field that goes beyond the auditor's traditional attestation function.

Accepted Answer

A) True 
 B)False

Question 15

What are management responsibilities under section 302 and 404?

Accepted Answer

Section 302 requires that corporate mana

Question 16

According to COSO, an effective accounting system performs all of the following except

Accepted Answer

A)  identifies and records all valid financial transactions 
B)  records financial transactions in the appropriate accounting period 
C)  separates the duties of data entry and report generation 
D)  records all financial transactions promptly 
A)  identifies and records all valid financial transactions 
B)  records financial transactions in the appropriate accounting period 
C)  separates the duties of data entry and report generation 
D)  records all financial transactions promptly

Question 17

Why is an Independent Audit Committee important to a company?

Accepted Answer

The Sarbanes-Oxley Act requires all audi

Question 18

Which concept is not an integral part of an audit?

Accepted Answer

A)  evaluating internal controls 
B)  preparing financial statements 
C)  expressing an opinion 
D)  analyzing financial data 
A)  evaluating internal controls 
B)  preparing financial statements 
C)  expressing an opinion 
D)  analyzing financial data

Question 19

The concept of reasonable assurance suggests that

Accepted Answer

A)  the cost of an internal control should be less than the benefit it provides 
B)  a well-designed system of internal controls will detect all fraudulent activity 
C)  the objectives achieved by an internal control system vary depending on the data processing method 
D)  the effectiveness of internal controls is a function of the industry environment 
A)  the cost of an internal control should be less than the benefit it provides 
B)  a well-designed system of internal controls will detect all fraudulent activity 
C)  the objectives achieved by an internal control system vary depending on the data processing method 
D)  the effectiveness of internal controls is a function of the industry environment

Question 20

A strong internal control system will reduce the amount of substantive testing that must be performed.

Accepted Answer

A) True 
 B)False

Typically, internal auditors perform all of the following tasks except

Explain the relationship between internal controls and substantive testing.

Audit risk is the probability that the auditor will render an unqualified opinion on financial statements that are materially misstated.

Discuss the key features of Section 302 of the Sarbanes-Oxley Act.

The most cost-effective type of internal control is

Section 302 requires the management of public companies to assess and formally report on the effectiveness of their organization's internal controls.

Section 404 requires that corporate management (including the CEO) certify their organization's internal controls on a quarterly and annual basis.

Control risk is

A qualified opinion on management's assessment of internal controls over the financial reporting system necessitates a qualified opinion on the financial statements?

Inherent risk

COSO identifies two broad groupings of information system controls. What are they?

What are the objectives of application controls?

Which of the following indicates a strong internal control environment?

Advisory services is an emerging field that goes beyond the auditor's traditional attestation function.

What are management responsibilities under section 302 and 404?

According to COSO, an effective accounting system performs all of the following except

Why is an Independent Audit Committee important to a company?

Which concept is not an integral part of an audit?

The concept of reasonable assurance suggests that

A strong internal control system will reduce the amount of substantive testing that must be performed.

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

Typically, internal auditors perform all of the following tasks except

Explain the relationship between internal controls and substantive testing.

Audit risk is the probability that the auditor will render an unqualified opinion on financial statements that are materially misstated.

Discuss the key features of Section 302 of the Sarbanes-Oxley Act.

The most cost-effective type of internal control is

Section 302 requires the management of public companies to assess and formally report on the effectiveness of their organization's internal controls.

Section 404 requires that corporate management (including the CEO) certify their organization's internal controls on a quarterly and annual basis.

Control risk is

A qualified opinion on management's assessment of internal controls over the financial reporting system necessitates a qualified opinion on the financial statements?

Inherent risk

COSO identifies two broad groupings of information system controls. What are they?

What are the objectives of application controls?

Which of the following indicates a strong internal control environment?

Advisory services is an emerging field that goes beyond the auditor's traditional attestation function.

What are management responsibilities under section 302 and 404?

According to COSO, an effective accounting system performs all of the following except

Why is an Independent Audit Committee important to a company?

Which concept is not an integral part of an audit?

The concept of reasonable assurance suggests that

A strong internal control system will reduce the amount of substantive testing that must be performed.

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