Exam 7: Internal Control, Understanding the Clients Internal Control Over Financial Reporting and Auditing Design Effectiveness

Segregation of duties within the IT world is most concerned with separating the functions of:

Which of the following is not a COSO control activity?

According to the PCAOB Guidance for Auditors of Smaller Public Companies, which of the following important control characteristics is likely to exist in smaller companies?

When a client company's systems rely heavily on IT, auditors will be concerned with the possibility that:

A material weakness will always exist when a company has:

Each of the following represents a risk of relying on computerized information systems except:

Why will an auditor more extensively test controls for the completeness assertion on liability accounts than on asset accounts?

Recurring financial activities that are reflected in the accounting records in the normal course of business are referred to as:

The management assertion that is concerned with the separation between fiscal years is the:

Which technique of ICFR documentation describes the activities performed and flow of documents using diagrams and symbols?

[Adapted from Wiley CPA Review] Dana, an auditor for the audit firm C&C, recently finished up testing controls relating to management's assertion concerning the completeness of sales transactions. In her audit work papers, Dana included the following: • "I inspected the entity's reports of prenumbered shipping documents that have not been recorded in the sales journal" • "In the course of my testing, I have found 0 items that have been sold but have not recorded in the sales journal." • "Since testing was performed without exception, I have determined that the controls to address the completeness of sales transactions are operating effectively." Which essential elements of AS 3's documentation requirements did Dana omit from her documentation?

Which of the following is not an entity-level control that monitors other controls?

Tracing is a specific type of document inspection whereby the auditor verifies whether the document:

A client company has a small number of finance and IT personnel that supports a packaged financial reporting software system. The appropriate tests of controls could include auditor verification that:

The objective of an integrated audit is to report on ICFR and the financial statements of a public company. How does an auditor express these two opinions?

If an auditor determines that a client company's internal controls are producing reliable and complete financial information, the auditor will rely upon the internal control system and:

Which of the following statements regarding Enterprise Risk Management (ERM) is not true?

Which of the following statements is true regarding the SEC's 2007 interpretive release to management for assessing and reporting on the effectiveness of ICFR?

The best way to determine whether internal controls and ERM systems are functioning is through:

Within the ERM framework, the sequence of tasks is objective setting, event identification, risk assessment, and risk response.