Exam 3: Internal Control Over Financial Reporting: Responsibilities of Management and the External Auditors

Internal control is a process designed to achieve objectives in which one of the following categories?

The better the quality of the internal controls, the more an auditor can rely on the controls.

A material weakness in internal control is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the company's annual or interim financial statements will not be prevented or detected on a timely basis.

Which of the following is not part of the control environment of an organization?

Which of the following is an example of a control environment deficiency.

Performing a walkthrough provides an understanding of the nature of processing in important accounting applications.

Which component of COSO's internal control system concerns the process that provides feedback on the effectiveness of the other four components of internal control?

Which of the following is not one of the underlying principles of an effective control environment as developed by COSO?

A control designed to ensure that the number of sales transactions recorded in the accounting records matches the number of sales invoices entered during processing is known as which type of control?

Preventive controls are designed to prevent the occurrence of a misstatement.

What is the primary benefit of effective internal control in an organization?

With whom does the tone of internal control typically originate?

Internal control is a process, effected by an entity's board of directors, management, and other personnel, designed to provide reasonable assurance regarding the achievement of objectives relating to operations, reporting, and compliance.

Which one of the following represents a control deficiency?

A control designed to ensure that no employee is paid for more than 80 hours of sick pay is an example of which type of control?

Which of the following is not a major component of an organization's internal controls?

A company's internal auditing function should not be considered when assessing the effectiveness of internal controls.

The payroll department should be responsible for signing payroll checks.

Physical controls are necessary to protect and safeguard assets from accidental or intentional destruction and theft.

A strong control environment can reduce all the financial reporting risks to zero.