Exam 4: Internal Control, Control Risk, Section 404 Audits, Fraud Auditing, and the Impact of Information Technology on the Audit Process

For inquiry to be effective, auditors need to be skilled at listening and ________ an interviewee's response to questions.

Free

(Multiple Choice)

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Question 1

Correct Answer:

Verified

Briefly describe the responsibilities of management and external auditors for internal controls.

Free

(Essay)

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Question 2

Correct Answer:

Verified

Management is responsible for establishing and maintaining the entity's internal controls. For U.S. public companies, management is also required by Section 404 to publicly report on the operating effectiveness of those controls. The auditor's responsibilities include understanding and testing internal control over financial reporting. In many Arab countries, auditors have no formal responsibilities for reporting on internal control. In the U.S., auditors of public companies are also required by Section 404 to issue an audit report on management's assessment of its internal controls, including the auditor's opinion on the operating effectiveness of those controls.

Information and idea exchange sessions are required by ISAs 240 and 315.

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(True/False)

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Question 3

Correct Answer:

Verified

True

Which section of the Sarbanes- Oxley Act requires management to issue an internal control report?

(Multiple Choice)

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Question 4

Before making the final assessment of internal control at the end of an integrated audit, the auditor must:

(Short Answer)

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Question 5

Companies with non- complex IT environments often rely on microcomputers to perform accounting system functions. Which of the following is not an audit consideration in such an environment?

(Multiple Choice)

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Question 6

What are the two primary factors that auditors consider in determining if an entity is auditable?

(Essay)

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Question 7

Which of the following is not one of the three categories of testing strategies when auditing through the computer?

(Multiple Choice)

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Question 8

Inherent risk is often reduced in complex IT systems relative to less complex IT systems.

(True/False)

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Question 9

Briefly discuss the discussions required by ISAs 240 and 315 within the audit team to consider fraud. Be sure to include a list of issues that should be addressed in these discussions.

(Essay)

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Question 10

Which of the following statements describes circumstances that underlie employee incentives to misappropriate assets?

(Multiple Choice)

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Question 11

The auditor's tests to understand the client's internal controls might include which of the following types of procedures?

(Short Answer)

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Question 12

Which of the following issues is normally part of the 'brainstorming' session required by ISA 240 and 315?

(Short Answer)

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Question 13

Internal controls can never be considered as absolutely effective because:

(Multiple Choice)

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Question 14

Because general controls have a ________ effect on the operating effectiveness of application controls, auditors must consider general controls.

(Multiple Choice)

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Question 15

The most common technique used by management to misstate financial information is:

(Multiple Choice)

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Question 16

What tools do companies use to limit access to sensitive company data?

(Short Answer)

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(36)

Question 17

The purpose of an entity's accounting information and communication system is to:

(Short Answer)

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Question 18

Compared to a public company, the most important difference in a nonpublic company in assessing control risk is the ability to assess control risk at ________ for any or all control- related objectives.

(Multiple Choice)

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Question 19

Which of the following parties provides an assessment of the effectiveness of internal control over financial reporting for U.S. public companies?

(Short Answer)

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(36)

Question 20

Showing 1 - 20 of 70

For inquiry to be effective, auditors need to be skilled at listening and ________ an interviewee's response to questions.

Briefly describe the responsibilities of management and external auditors for internal controls.

Information and idea exchange sessions are required by ISAs 240 and 315.

Which section of the Sarbanes- Oxley Act requires management to issue an internal control report?

Before making the final assessment of internal control at the end of an integrated audit, the auditor must:

Companies with non- complex IT environments often rely on microcomputers to perform accounting system functions. Which of the following is not an audit consideration in such an environment?

What are the two primary factors that auditors consider in determining if an entity is auditable?

Which of the following is not one of the three categories of testing strategies when auditing through the computer?

Inherent risk is often reduced in complex IT systems relative to less complex IT systems.

Briefly discuss the discussions required by ISAs 240 and 315 within the audit team to consider fraud. Be sure to include a list of issues that should be addressed in these discussions.

Which of the following statements describes circumstances that underlie employee incentives to misappropriate assets?

The auditor's tests to understand the client's internal controls might include which of the following types of procedures?

Which of the following issues is normally part of the 'brainstorming' session required by ISA 240 and 315?

Internal controls can never be considered as absolutely effective because:

Because general controls have a ________ effect on the operating effectiveness of application controls, auditors must consider general controls.

The most common technique used by management to misstate financial information is:

What tools do companies use to limit access to sensitive company data?

The purpose of an entity's accounting information and communication system is to:

Compared to a public company, the most important difference in a nonpublic company in assessing control risk is the ability to assess control risk at ________ for any or all control- related objectives.

Which of the following parties provides an assessment of the effectiveness of internal control over financial reporting for U.S. public companies?

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