Exam 12: Assessing Control Risk and Reporting on Internal Controls

In October 2013, the PCAOB Staff Audit Practice Alert No.11, titled "Considerations for Audits of Internal Control over Financial Reporting". In this Staff Audit Practice Alert, the PCAOB highlighted three common deficiencies related to audits of internal control. Name these three common deficiencies.

Which of the following computer-assisted auditing techniques inserts an audit module in the client's application system to identify specific types of transactions?

An adequate system flowchart should include the same characteristics required for system narratives.

The AICPA guide to data analytics indicates audit data analysis can be used throughout the audit process, but not including tests of controls.

What type of report is issued when one or more material internal control weaknesses exist?

The auditor's objective in determining whether the client's computer program correctly processes valid and invalid transactions is accomplished through the

When testing manual or automated controls,

Controls that are applied throughout the accounting period must be tested both at an interim date and then again on the balance sheet date.

The assessment of control risk does not impact the testing of controls.

If there is more than a reasonable possibility that a material misstatement could result from a significant deficiency found during the audit, then that deficiency is considered a material weakness in internal control.

Which of the following is the correct definition of "control deficiency"?

Which of the following is an accurate statement relating to the extent of procedures?

You are performing the audit of internal control for Clifton Company. Which of the following would represent a material weakness in internal control?

A company's size should have no impact on the nature of internal control and the controls that are implemented.

The employee in charge of authorizing credit to the company's customers does not fully understand the concept of credit risk. This lack of knowledge would

In an audit of a nonpublic company, the less control risk there is, the smaller the amount of planned substantive evidence that is required.

Describe three computer auditing techniques available to the auditor.

Generalized audit software is used to test automated controls.

When identifying audit objectives and existing controls,

In some cases, management can correct deficiencies and material weaknesses before the auditor does significant testing, which may permit a reduction in control risk.