Question 1

Explain the different opinions that auditors can issue for an entity's internal control over financial reporting.

Accepted Answer

Auditors can issue the following opinion

Question 2

Which of the following is the least important audit reason for the auditor's obtaining an understanding of a company's internal control?

Accepted Answer

A)  To serve as a basis for constructive suggestions. 
B)  To plan subsequent substantive tests. 
C)  To identify types of possible misstatements that may occur. 
D)  To consider factors that may affect the risk of material misstatement. 
A)  To serve as a basis for constructive suggestions. 
B)  To plan subsequent substantive tests. 
C)  To identify types of possible misstatements that may occur. 
D)  To consider factors that may affect the risk of material misstatement.

Question 3

Control strengths and weaknesses should be documented in audit documentation,sometimes called

Accepted Answer

A)  Questionnaires, narratives, and flowcharts. 
B)  Bridge working papers. 
C)  Communications of significant deficiencies. 
D)  Internal control letters. 
A)  Questionnaires, narratives, and flowcharts. 
B)  Bridge working papers. 
C)  Communications of significant deficiencies. 
D)  Internal control letters.

Question 4

Significant deficiencies are defined as conditions that

Accepted Answer

A)  Could adversely affect the organization's ability to initiate, record, process, and report financial data in the financial statements. 
B)  Result in a reasonable possibility that a material misstatement exists in financial statements. 
C)  Exist when the design or operation of a control does not allow the company's management or employees to detect or prevent misstatements in a timely fashion. 
D)  Relate to either a necessary control that is missing or an existing control that is so poorly designed that it fails to satisfy the control's objective. 
A)  Could adversely affect the organization's ability to initiate, record, process, and report financial data in the financial statements. 
B)  Result in a reasonable possibility that a material misstatement exists in financial statements. 
C)  Exist when the design or operation of a control does not allow the company's management or employees to detect or prevent misstatements in a timely fashion. 
D)  Relate to either a necessary control that is missing or an existing control that is so poorly designed that it fails to satisfy the control's objective.

Question 5

Which of the following is not one of COSO's objectives for internal controls?

Accepted Answer

A)  Efficiency and effectiveness of operations. 
B)  Reliability of financial reporting. 
C)  Maximization of profit. 
D)  Compliance with applicable laws and regulations. 
A)  Efficiency and effectiveness of operations. 
B)  Reliability of financial reporting. 
C)  Maximization of profit. 
D)  Compliance with applicable laws and regulations.

Question 6

Auditors of public companies do not need to determine the quality of a client's internal control; they need to know only enough to plan the audit work.

Accepted Answer

A) True 
 B)False

Question 7

The attitudes of managers and directors are probably the most pervasive influences on the control environment.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following would probably not be considered an indication of a material weakness?

Accepted Answer

A)  Evidence of a material misstatement. 
B)  Ineffective oversight by the audit committee. 
C)  Immaterial fraud committed by senior management. 
D)  Overproduction by the manufacturing plant. 
A)  Evidence of a material misstatement. 
B)  Ineffective oversight by the audit committee. 
C)  Immaterial fraud committed by senior management. 
D)  Overproduction by the manufacturing plant.

Question 9

Tests of controls in a GAAS audit are required for

Accepted Answer

A)  Obtaining evidence about the financial statement assertions. 
B)  Accomplishing control over the occurrence of recorded transactions. 
C)  Applying analytical procedures to financial statement balances. 
D)  Obtaining evidence about the operating effectiveness of client control activities. 
A)  Obtaining evidence about the financial statement assertions. 
B)  Accomplishing control over the occurrence of recorded transactions. 
C)  Applying analytical procedures to financial statement balances. 
D)  Obtaining evidence about the operating effectiveness of client control activities.

Question 10

The following are a number of ASB management assertions.
A.Occurrence
B.Completeness
C.Rights and obligations
D.Allocation or valuation
E.Classification
F.Existence
G.Cutoff
H.Accuracy
I.Understandability
For each of the following control activities,place the letter of the preceding management assertion that best applies to each of the following controls in the blank space.
_____ 1.Matching shipping documents with sales invoices before a sale is recorded.
_____ 2.Balancing the total of individual customers' receivables with the control account.
_____ 3.Obtaining sales manager's approval of taking discounts.
_____ 4.Doing a computer check for billing the quantity shipped,list price,and total.
_____ 5.Accounting for numerical sequence of prenumbered shipping documents.

Accepted Answer

The answer of The following are a number of ASB...

Question 11

The COSO report indicates that internal control should be considered a process,not an end in itself.

Accepted Answer

A) True 
 B)False

Question 12

In most audits of large entities,control risk assessment contributes to audit efficiency,which means that

Accepted Answer

A)  The cost of substantive procedures will exceed the cost of control evaluation work. 
B)  Auditors will be able to reduce the cost of substantive procedures by an amount more than the control evaluation costs. 
C)  The cost of control evaluation work will exceed the cost of substantive procedures. 
D)  Auditors will be able to reduce the cost of substantive procedures by an amount less than the cost of tests of controls. 
A)  The cost of substantive procedures will exceed the cost of control evaluation work. 
B)  Auditors will be able to reduce the cost of substantive procedures by an amount more than the control evaluation costs. 
C)  The cost of control evaluation work will exceed the cost of substantive procedures. 
D)  Auditors will be able to reduce the cost of substantive procedures by an amount less than the cost of tests of controls.

Question 13

To reduce the control risk to a low level,auditors must determine (1)the ________________________________ of company compliance with control policies and (2)the _____________________________________ of company compliance.

Accepted Answer

required d

Question 14

Which of the following is an information technology general control?

Accepted Answer

A)  Check digit. 
B)  Run-to-run totals. 
C)  Distribution of computerized output. 
D)  Separation of duties in the IT department. 
A)  Check digit. 
B)  Run-to-run totals. 
C)  Distribution of computerized output. 
D)  Separation of duties in the IT department.

Question 15

Tests of controls consist of procedures designed to produce evidence regarding how effectively the client's controls work in practice.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following most likely would not be considered an inherent limitation of the potential effectiveness of an entity's internal controls?

Accepted Answer

A)  Incompatible duties. 
B)  Management override. 
C)  Mistakes in judgment. 
D)  Collusion among employees. 
A)  Incompatible duties. 
B)  Management override. 
C)  Mistakes in judgment. 
D)  Collusion among employees.

Question 17

Which of the following does not accurately summarize auditors' requirements regarding internal control?

Accepted Answer

A)  Option A 
B)  Option B 
C)  Option C 
D)  Option D 
A)  Option A 
B)  Option B 
C)  Option C 
D)  Option D

Question 18

Tracing bills of lading to sales invoices provides evidence that

Accepted Answer

A)  Shipments to customers were invoiced. 
B)  Shipments to customers were recorded as sales. 
C)  Recorded sales were shipped. 
D)  Invoiced sales were recorded as sales. 
A)  Shipments to customers were invoiced. 
B)  Shipments to customers were recorded as sales. 
C)  Recorded sales were shipped. 
D)  Invoiced sales were recorded as sales.

Question 19

PCAOB Auditing Standard No.5 only applies to public companies.

Accepted Answer

A) True 
 B)False

Question 20

____________________________________ are specific actions taken by a client's management and employees to help ensure that management directives are carried out.

Accepted Answer

The answer of ____________________________________ are specific actions taken by a...

Explain the different opinions that auditors can issue for an entity's internal control over financial reporting.

Which of the following is the least important audit reason for the auditor's obtaining an understanding of a company's internal control?

Control strengths and weaknesses should be documented in audit documentation,sometimes called

Significant deficiencies are defined as conditions that

Which of the following is not one of COSO's objectives for internal controls?

Auditors of public companies do not need to determine the quality of a client's internal control; they need to know only enough to plan the audit work.

The attitudes of managers and directors are probably the most pervasive influences on the control environment.

Which of the following would probably not be considered an indication of a material weakness?

Tests of controls in a GAAS audit are required for

The COSO report indicates that internal control should be considered a process,not an end in itself.

In most audits of large entities,control risk assessment contributes to audit efficiency,which means that

To reduce the control risk to a low level,auditors must determine (1)the of company compliance with control policies and (2)the _____ of company compliance.

Which of the following is an information technology general control?

Tests of controls consist of procedures designed to produce evidence regarding how effectively the client's controls work in practice.

Which of the following most likely would not be considered an inherent limitation of the potential effectiveness of an entity's internal controls?

Which of the following does not accurately summarize auditors' requirements regarding internal control?

Tracing bills of lading to sales invoices provides evidence that

PCAOB Auditing Standard No.5 only applies to public companies.

____________________________________ are specific actions taken by a client's management and employees to help ensure that management directives are carried out.

Auditing and Assurance Services

Professional Standards

Engagement Planning

Management Fraud and Audit Risk

Employee Fraud and the Audit of Cash

Revenue and Collection Cycle

Acquisition and Expenditure Cycle

Production Cycle

Finance and Investment Cycle

Completing the Audit

Reports on Audited Financial Statements

Other Public Accounting Services

Professional Ethics

Legal Liability

Internal Governmental and Fraud Audits

Overview of Sampling

Attributes Sampling

Variables Sampling

Auditing in a Computerized Environment

Filters

Exam 5: Risk Assessment: Internal Control Evaluation

Explain the different opinions that auditors can issue for an entity's internal control over financial reporting.

Which of the following is the least important audit reason for the auditor's obtaining an understanding of a company's internal control?

Control strengths and weaknesses should be documented in audit documentation,sometimes called

Significant deficiencies are defined as conditions that

Which of the following is not one of COSO's objectives for internal controls?

Auditors of public companies do not need to determine the quality of a client's internal control; they need to know only enough to plan the audit work.

The attitudes of managers and directors are probably the most pervasive influences on the control environment.

Which of the following would probably not be considered an indication of a material weakness?

Tests of controls in a GAAS audit are required for

The COSO report indicates that internal control should be considered a process,not an end in itself.

In most audits of large entities,control risk assessment contributes to audit efficiency,which means that

To reduce the control risk to a low level,auditors must determine (1)the ________________________________ of company compliance with control policies and (2)the _____________________________________ of company compliance.

Which of the following is an information technology general control?

Tests of controls consist of procedures designed to produce evidence regarding how effectively the client's controls work in practice.

Which of the following most likely would not be considered an inherent limitation of the potential effectiveness of an entity's internal controls?

Which of the following does not accurately summarize auditors' requirements regarding internal control?

Tracing bills of lading to sales invoices provides evidence that

PCAOB Auditing Standard No.5 only applies to public companies.

____________________________________ are specific actions taken by a client's management and employees to help ensure that management directives are carried out.

Auditing and Assurance Services

Professional Standards

Engagement Planning

Management Fraud and Audit Risk

Employee Fraud and the Audit of Cash

Revenue and Collection Cycle

Acquisition and Expenditure Cycle

Production Cycle

Finance and Investment Cycle

Completing the Audit

Reports on Audited Financial Statements

Other Public Accounting Services

Professional Ethics

Legal Liability

Internal Governmental and Fraud Audits

Overview of Sampling

Attributes Sampling

Variables Sampling

Auditing in a Computerized Environment

Filters

To reduce the control risk to a low level,auditors must determine (1)the of company compliance with control policies and (2)the _____ of company compliance.