Exam 12: Assessing Control Risk and Reporting on Internal Controls

The auditor should identify and include only ________ controls since they will be sufficient to achieve the transaction-related audit objectives and will also provide audit efficiency.

Which of the following is true regarding the relationship between tests of controls and procedures to obtain an understanding?

When there are a number of controls tested in prior audits that have not been changed, auditing standard require auditors to test some of those controls each year to ensure there is a rotation of controls testing throughout the three-year period.

A design deficiency exists if the person performing the control is not qualified.

An auditor is likely to use four types of procedures to support the operating effectiveness of internal controls. Which of the following would generally not be used?

Auditors often identify less significant internal control-related issues, as well as opportunities for the client to make operational improvements in the

Which of the following best describes the test data approach?

Narratives, flowcharts, and internal control questionnaires are three common methods of

For financial statement audits, auditors need to understand controls that are relevant to the audit in order to

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

Name four types of evidence which the auditor uses to obtain an understanding of the design and implementation of controls.

When assessing control risk,

You are the audit manager for a new audit client. Your staff auditors are unsure of what constitutes a control deficiency. Discuss the terms control deficiency, design deficiency, and operating deficiency.

Key controls are not sufficient to achieve the transaction-related audit objectives.

Which type of evidence is not used by the auditor to obtain an understanding of the design and implementation of internal control?

When dealing with the documentation of internal control,

A significant internal control deficiency is always considered a material weakness.

In a small business, the daily involvement of the owner in the business is not sufficient to overcome significant deficiencies or material weaknesses in internal controls.

Flowcharts have two advantages over narratives: typically, they are easier to read and easier to update.

When using questionnaires, "no" responses typically indicate a potential internal control deficiency requiring follow up by the auditor.