Question 1

A bank reconciliation is an example of which type of control?

Accepted Answer

A)  An input control. 
B)  An output control. 
C)  A preventive control. 
D)  A detective control. 
A)  An input control. 
B)  An output control. 
C)  A preventive control. 
D)  A detective control.

Question 2

Several significant deficiencies in internal controls may constitute a material weakness.

Accepted Answer

A) True 
 B)False

Question 3

Control activities are the component of internal control that includes control actions that have been established by policies and procedures

Accepted Answer

A) True 
 B)False

Question 4

COSO: A Framework for Internal Control.
What is internal control as defined by COSO? Also explain, the other elements of the definition that are important to internal control

Accepted Answer

COSO defines internal control as a proce

Question 5

In a large company, who usually monitors the internal control?

Accepted Answer

A)  Internal auditors. 
B)  PCAOB. 
C)  CFO. 
D)  External auditors. 
A)  Internal auditors. 
B)  PCAOB. 
C)  CFO. 
D)  External auditors.

Question 6

Which one of the following is not a control activity implemented in most accounting systems?

Accepted Answer

A)  Segregation of duties. 
B)  Competent, trustworthy employees. 
C)  Authorization procedures. 
D)  All of these activities are normally implemented. 
A)  Segregation of duties. 
B)  Competent, trustworthy employees. 
C)  Authorization procedures. 
D)  All of these activities are normally implemented.

Question 7

Control activities implemented to mitigate transaction processing risk that typically affect only certain processes, transactions, accounts, and assertions are referred as transaction or application controls.

Accepted Answer

A) True 
 B)False

Question 8

Preventive controls are generally more cost-efficient than detective controls.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following is an inherent limitation of internal controls?

Accepted Answer

A)  Lack of auditor independence. 
B)  Collusion. 
C)  Separation of duties. 
D)  Employee peer review. 
A)  Lack of auditor independence. 
B)  Collusion. 
C)  Separation of duties. 
D)  Employee peer review.

Question 10

Preventive controls are designed to provide reasonable assurance that the correct program is used for processing, all transactions are processed, and the transactions update appropriate files.

Accepted Answer

A) True 
 B)False

Question 11

An edit test is considered to be which type of control?

Accepted Answer

A)  An input control. 
B)  A processing control. 
C)  An output control 
D)  A supporting control. 
A)  An input control. 
B)  A processing control. 
C)  An output control 
D)  A supporting control.

Question 12

One of the advantages of a computerized accounting system is that the computerized system eliminates the need for internal controls.

Accepted Answer

A) True 
 B)False

Question 13

Which one of the following COSO components of internal controls influences the tone for the organization?

Accepted Answer

A)  Control risk assessment. 
B)  Control environment. 
C)  Information and communication. 
D)  Monitoring. 
A)  Control risk assessment. 
B)  Control environment. 
C)  Information and communication. 
D)  Monitoring.

Question 14

Requiring the mail clerk to prepare a listing of all checks received, with copies of the list going to the cashier and to accounting, is an example of which type of control?

Accepted Answer

A)  Preventive. 
B)  Corrective. 
C)  Detective. 
D)  Directive. 
A)  Preventive. 
B)  Corrective. 
C)  Detective. 
D)  Directive.

Question 15

Management should test all internal controls for effectiveness when performing their annual evaluation of the internal control structure.

Accepted Answer

A) True 
 B)False

Question 16

Internal controls may be preventive or detective.Which of the following controls is preventive?

Accepted Answer

A)  Requiring two persons to open mail containing payments. 
B)  Reconciling the accounts receivable subsidiary file with the control account. 
C)  Using batch totals. 
D)  Preparing bank reconciliations. 
A)  Requiring two persons to open mail containing payments. 
B)  Reconciling the accounts receivable subsidiary file with the control account. 
C)  Using batch totals. 
D)  Preparing bank reconciliations.

Question 17

Monitoring of the internal controls involves assessment by appropriate personnel of the design and operation of controls on a timely basis and taking necessary actions.

Accepted Answer

A) True 
 B)False

Question 18

The COSO principle that an organization should identify and assess changes that significantly impact the system of internal control is related to which COSO component?

Accepted Answer

A)  Control Environment 
B)  Risk Assessment 
C)  Control Activities 
D)  Monitoring 
A)  Control Environment 
B)  Risk Assessment 
C)  Control Activities 
D)  Monitoring

Question 19

Managers must use professional judgment to determine whether identified control deficiencies rise to the level of a significant deficiency or material weakness.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following best represents a walkthrough?

Accepted Answer

A)  The controller reviews the bank reconciliation prepared by the accountant and its resulting journal entries. 
B)  The auditor walks the production line to find inefficiencies in the inventory process and reports them to management. 
C)  The controller takes a sample of recorded write-offs to ensure they have been properly approved. 
D)  The auditor traces three purchasing transactions from the purchase order to the financial statement for observation and understanding. 
A)  The controller reviews the bank reconciliation prepared by the accountant and its resulting journal entries. 
B)  The auditor walks the production line to find inefficiencies in the inventory process and reports them to management. 
C)  The controller takes a sample of recorded write-offs to ensure they have been properly approved. 
D)  The auditor traces three purchasing transactions from the purchase order to the financial statement for observation and understanding.

A bank reconciliation is an example of which type of control?

Several significant deficiencies in internal controls may constitute a material weakness.

Control activities are the component of internal control that includes control actions that have been established by policies and procedures

COSO: A Framework for Internal Control. What is internal control as defined by COSO? Also explain, the other elements of the definition that are important to internal control

In a large company, who usually monitors the internal control?

Which one of the following is not a control activity implemented in most accounting systems?

Control activities implemented to mitigate transaction processing risk that typically affect only certain processes, transactions, accounts, and assertions are referred as transaction or application controls.

Preventive controls are generally more cost-efficient than detective controls.

Which of the following is an inherent limitation of internal controls?

Preventive controls are designed to provide reasonable assurance that the correct program is used for processing, all transactions are processed, and the transactions update appropriate files.

An edit test is considered to be which type of control?

One of the advantages of a computerized accounting system is that the computerized system eliminates the need for internal controls.

Which one of the following COSO components of internal controls influences the tone for the organization?

Requiring the mail clerk to prepare a listing of all checks received, with copies of the list going to the cashier and to accounting, is an example of which type of control?

Management should test all internal controls for effectiveness when performing their annual evaluation of the internal control structure.

Internal controls may be preventive or detective.Which of the following controls is preventive?

Monitoring of the internal controls involves assessment by appropriate personnel of the design and operation of controls on a timely basis and taking necessary actions.

The COSO principle that an organization should identify and assess changes that significantly impact the system of internal control is related to which COSO component?

Managers must use professional judgment to determine whether identified control deficiencies rise to the level of a significant deficiency or material weakness.

Which of the following best represents a walkthrough?

Auditing: Integral to the Economy

The Auditors Responsibilities Regarding Fraud and Mechanisms to Address Fraud: Regulation and Corporate Governance

Professional Liability, Auditor Judgment Frameworks, and Professional Responsibilities

Professional Auditing Standards and the Audit Opinion Formulation Process

A Framework for Audit Evidence

Planning the Audit: Identifying and Responding to the Risks of Material Misstatement

Specialized Audit Tools: Sampling and Generalized Audit Software

Auditing the Revenue Cycle

Auditing Cash and Marketable Securities

Auditing Inventory, Goods and Services, and Accounts Payable: the Acquisition and Payment Cycle

Auditing Long-Lived Assets: Acquisition, Use, Impairment, and Disposal

Auditing Debt Obligations and Stockholders Equity Transactions

Activities Required in Completing a Quality Audit

Audit Reports on Financial Statements

Advanced Topics Concerning Complex Auditing Judgments

Other Services Provided by Audit Firms

Filters

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

A bank reconciliation is an example of which type of control?

Several significant deficiencies in internal controls may constitute a material weakness.

Control activities are the component of internal control that includes control actions that have been established by policies and procedures

COSO: A Framework for Internal Control. What is internal control as defined by COSO? Also explain, the other elements of the definition that are important to internal control

In a large company, who usually monitors the internal control?

Which one of the following is not a control activity implemented in most accounting systems?

Control activities implemented to mitigate transaction processing risk that typically affect only certain processes, transactions, accounts, and assertions are referred as transaction or application controls.

Preventive controls are generally more cost-efficient than detective controls.

Which of the following is an inherent limitation of internal controls?

Preventive controls are designed to provide reasonable assurance that the correct program is used for processing, all transactions are processed, and the transactions update appropriate files.

An edit test is considered to be which type of control?

One of the advantages of a computerized accounting system is that the computerized system eliminates the need for internal controls.

Which one of the following COSO components of internal controls influences the tone for the organization?

Requiring the mail clerk to prepare a listing of all checks received, with copies of the list going to the cashier and to accounting, is an example of which type of control?

Management should test all internal controls for effectiveness when performing their annual evaluation of the internal control structure.

Internal controls may be preventive or detective.Which of the following controls is preventive?

Monitoring of the internal controls involves assessment by appropriate personnel of the design and operation of controls on a timely basis and taking necessary actions.

The COSO principle that an organization should identify and assess changes that significantly impact the system of internal control is related to which COSO component?

Managers must use professional judgment to determine whether identified control deficiencies rise to the level of a significant deficiency or material weakness.

Which of the following best represents a walkthrough?

Auditing: Integral to the Economy

The Auditors Responsibilities Regarding Fraud and Mechanisms to Address Fraud: Regulation and Corporate Governance

Professional Liability, Auditor Judgment Frameworks, and Professional Responsibilities

Professional Auditing Standards and the Audit Opinion Formulation Process

A Framework for Audit Evidence

Planning the Audit: Identifying and Responding to the Risks of Material Misstatement

Specialized Audit Tools: Sampling and Generalized Audit Software

Auditing the Revenue Cycle

Auditing Cash and Marketable Securities

Auditing Inventory, Goods and Services, and Accounts Payable: the Acquisition and Payment Cycle

Auditing Long-Lived Assets: Acquisition, Use, Impairment, and Disposal

Auditing Debt Obligations and Stockholders Equity Transactions

Activities Required in Completing a Quality Audit

Audit Reports on Financial Statements

Advanced Topics Concerning Complex Auditing Judgments

Other Services Provided by Audit Firms

Filters