Exam 5: Risk Assessment: Internal Control Evaluation

Each of the following five cases illustrates specific control activities from a client's revenue cycle (accounts receivable/sales).For each of the procedures,(a)identify which management assertions apply and (b)what potential category of errors and frauds can be prevented.

In testing control activities,an auditor ordinarily selects from a variety of techniques,including

A(n)____________________________ is a single procedure that produces both control and substantive evidence.

During the audit of a private company's financial statements,which of the following statements best describes the minimum work an auditor must perform in connection with a company's internal control?

Which of the following would most likely be classified as a material weakness?

A control activity is an action taken to prevent,detect,and correct errors and frauds in transactions.

_________________________________ in internal control are matters that the auditors believe should be communicated to the clients' audit committee.

The primary purpose for obtaining an understanding of a nonpublic audit client's internal control is to

An action taken to prevent,detect,and correct errors and frauds in transactions is referred to as a

If the auditors encounter a significant scope limitation in evaluating a public company's internal control over financial reporting,which of the following types of opinions on the effectiveness of the company's internal control over financial reporting would be appropriate?

To test the operating effectiveness of a control,an audit team might use a combination of each of the following tests except for:

The ultimate purpose of assessing control risk is to contribute to the auditor's evaluation of the

The concept of ____________________________ recognizes that the cost of an entity's internal control should not exceed the benefits that are expected to be derived.

Auditors obtain an understanding of the internal control through all of the following except

The most efficient means of gathering evidence about a client's internal control is to prepare a flowchart of the system.

Accounting for the numerical sequence of shipping documents is a control procedure designed to achieve the internal control objective of

The purpose of separating the duties of hiring personnel and distributing payroll checks is to separate the

The audit task of control risk assessment involves learning what the company does to prevent,detect,and correct errors and fraud.

Dual-purpose audit tests are procedures that produce both control and substantive evidence.

The auditor's opinion on internal control under AS 5 relates only to controls existing at the end of the year.