Exam 10: Internal Control, Control Risk, and Section 404 Audits

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When a compensating control exists, the absence of a key control:

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Auditors of private companies may rely on prior periods' tests of controls.

(True/False)
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To obtain an understanding of an entity's control environment, an auditor should concentrate on the substance of management's policies and procedures rather than their form because:

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Two key concepts that underlie management's design and implementation of internal control are:

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Which of the following is not one of the subcomponents of the control environment?

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Walkthroughs combine observation, inspection, and inquiry to assure that the controls designed by management have been implemented.

(True/False)
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To promote operational efficiency, the internal audit department would ideally report to:

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

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The auditor's consideration of a private company's internal control is:

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The auditor must communicate:

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If the results of tests of controls support the design and operations of controls as expected, the auditor uses ________ control risk as the preliminary assessment.

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When documenting their understanding of a client's internal controls, auditors are required to use narratives.

(True/False)
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The chart of accounts is helpful in preventing classification errors if it accurately describes which type of transaction should be in each account.

(True/False)
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Internal controls normally include procedures designed to provide reasonable assurance that:

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When dealing with the documentation of internal control:

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Which of the following deficiency exists if a necessary control is missing or not properly formulated?

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Control risk is generally set at minimum for most private companies.

(True/False)
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In developing an understanding of the client's accounting information system the auditor follows a sequential process.Describe the process below:

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If a company has an effective internal audit department:

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To issue a report on internal control over financial reporting for a public company, an auditor must:

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