Exam 10: Considering Internal Control

The auditor must communicate:

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

Which of the following groups establishes and maintains the company's internal controls?

Match seven of the terms (a-i)with the definitions provided below (1-7): a.Control environment b.Control activities c.Independent checks on performance d.Internal control e.Monitoring f.Separation of duties g.General authorization h.Specific authorization i.Risk assessment ________ 1.Management's ongoing and periodic assessment of the quality of internal control performance to determine that controls are operating as intended and are modified when needed. ________ 2.Company-wide policies for the approval of all transactions within stated limits. ________ 3.The actions,policies,and procedures that reflect the overall attitudes of top management,directors,and owners of an entity about internal control and its importance to the entity. ________ 4.Segregation of the following activities in an organization: custody of assets,accounting,authorization,and operational responsibility. ________ 5.Management's identification and analysis of risks relevant to the preparation of financial statements in accordance with an applicable accounting framework. ________ 6.Policies and procedures that help ensure that necessary actions are taken to address risks in the achievement of the entity's objectives. ________ 7.A process designed to provide reasonable assurance regarding the achievement of management's objectives in the following categories: (1)reliability of financial reporting,(2)effectiveness and efficiency of operations,and (3)compliance with applicable laws and regulations.

To issue an unqualified opinion on internal control over financial reporting,there must be no identified material weaknesses and no restrictions on the scope of the audit.

The purpose of phase 3 in the "process for understanding internal control and assessing control risk" is to:

Which of the following represents a correct statement regarding internal control testing?

The scope of the auditor's report on internal control is limited to obtaining reasonable assurance that significant weaknesses in internal control are identified.

Management's identification and analysis of risk is an ongoing process and is a critical component of effective internal control.An important first step is for management to identify factors that may increase risk.Identify at least five factors,observable by management,which may lead to increased risk in a typical business organization.

An auditor should consider two key issues when obtaining an understanding of a client's internal controls.These issues are:

Once auditors determine that entity level controls are designed and placed in the operation they:

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:

It is important for the CPA to consider the competence of the clients' personnel because their competence has a direct impact upon the:

The financial statements may not correctly reflect accounting frameworks such as GAAP or IFRS if the:

Which of the following statements is most correct with respect to separation of duties?

Significant deficiencies and material weaknesses in internal control of a public company must be reported in writing to which of the following?

How must significant deficiencies and material weaknesses be communicated to those charged with governance?

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

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

List the three steps in management's assessment of risk and then list two of the categories of management assertions that must be satisfied during the risk assessment process.