Question 1

A bank reconciliation is an example of which type of control?

Accepted Answer

A) An input control. 
B) An output control. 
C) A preventive control. 
D) A detective control. 
A) An input control. 
B) An output control. 
C) A preventive control. 
D) A detective control.

Question 2

Control activities are the component of internal control that includes control actions that have been established by policies and procedures.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following is not one of the underlying principles of an effective control environment as developed by COSO?

Accepted Answer

A) The organization demonstrates a commitment to integrity and ethical values. 
B) The board of directors demonstrates independence from management and exercises oversight for the development and performance of internal control. 
C) Management establishes,with board oversight,structures,reporting lines,and appropriate authorities and responsibilities in pursuit of objectives. 
D) The organization considers the potential for fraud in assessing risks to the achievement of objectives. 
A) The organization demonstrates a commitment to integrity and ethical values. 
B) The board of directors demonstrates independence from management and exercises oversight for the development and performance of internal control. 
C) Management establishes,with board oversight,structures,reporting lines,and appropriate authorities and responsibilities in pursuit of objectives. 
D) The organization considers the potential for fraud in assessing risks to the achievement of objectives.

Question 4

Performing a walkthrough provides an understanding of the nature of processing in important accounting applications.

Accepted Answer

A) True 
 B)False

Question 5

The quality of an organization's internal control affects which of the following?

Accepted Answer

A) The reliability of financial data. 
B) The ability of management to make good decisions. 
C) The ability to remain in business. 
D) All of the above. 
A) The reliability of financial data. 
B) The ability of management to make good decisions. 
C) The ability to remain in business. 
D) All of the above.

Question 6

A control designed to ensure that no employee is paid for more than 80 hours of sick pay is an example of which type of control?

Accepted Answer

A) Entity-wide control. 
B) Processing control. 
C) Output control. 
D) Input control. 
A) Entity-wide control. 
B) Processing control. 
C) Output control. 
D) Input control.

Question 7

Effective internal control requires an organization to establish an appropriate structure and clearly defined lines of responsibility and authority where everyone in the organization has equal responsibility for the effective operation of internal control.

Accepted Answer

A) True 
 B)False

Question 8

Control activities implemented to mitigate transaction processing risks that typically affect only certain processes,transactions,accounts,and assertions are referred to as transaction or application controls.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following is the most severe?

Accepted Answer

A) Material weaknesses in internal control. 
B) Significant deficiencies in internal control. 
C) Operational deficiencies in internal control. 
D) Each is equally severe because it could result in inaccuracies in financial reporting. 
A) Material weaknesses in internal control. 
B) Significant deficiencies in internal control. 
C) Operational deficiencies in internal control. 
D) Each is equally severe because it could result in inaccuracies in financial reporting.

Question 10

Monitoring internal controls involves assessment by appropriate personnel of the design and operation of controls on a timely basis and taking necessary actions.

Accepted Answer

A) True 
 B)False

Question 11

Preventive controls are designed to prevent the occurrence of a misstatement.

Accepted Answer

A) True 
 B)False

Question 12

An auditor needs to understand a company's internal controls in order to anticipate the types of material misstatements that may occur.

Accepted Answer

A) True 
 B)False

Question 13

Which one of the following represents a control deficiency?

Accepted Answer

A) A missing control that is required for achievement of objectives. 
B) A control that operates as designed. 
C) A control that ensures the reliability of financial reporting. 
D) A control that does not prevent immaterial errors. 
A) A missing control that is required for achievement of objectives. 
B) A control that operates as designed. 
C) A control that ensures the reliability of financial reporting. 
D) A control that does not prevent immaterial errors.

Question 14

Which of the following is not true of internal control as defined by COSO?

Accepted Answer

A) It is narrower than internal control over financial reporting. 
B) It is a process that includes all elements of internal control working together. 
C) It includes all the people in the organization. 
D) It starts at the top of the organization in setting a tone. 
A) It is narrower than internal control over financial reporting. 
B) It is a process that includes all elements of internal control working together. 
C) It includes all the people in the organization. 
D) It starts at the top of the organization in setting a tone.

Question 15

Which of the following is not included as a component of an organization's internal control structure in the COSO framework?

Accepted Answer

A) Control risk. 
B) The control environment. 
C) Risk assessment. 
D) Control activities. 
A) Control risk. 
B) The control environment. 
C) Risk assessment. 
D) Control activities.

Question 16

Preventive controls are generally more cost-efficient than detective controls.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following is not part of the control environment?

Accepted Answer

A) Management philosophy and operating style. 
B) Methods of assigning authority and responsibility. 
C) Personnel policies and practices. 
D) Control activities. 
A) Management philosophy and operating style. 
B) Methods of assigning authority and responsibility. 
C) Personnel policies and practices. 
D) Control activities.

Question 18

A company's internal auditing function should not be considered when assessing the effectiveness of internal controls.

Accepted Answer

A) True 
 B)False

Question 19

Internal Control Principles One of the COSO principles of internal control requires organizations to demonstrate a commitment to attract,develop,and retain competent individuals in alignment with objectives.Discuss how this can be done.

Accepted Answer

Commitment to competence includes manage

Question 20

Control activities may be implemented at the organizational level and at the transactional level.

Accepted Answer

A) True 
 B)False

A bank reconciliation is an example of which type of control?

Control activities are the component of internal control that includes control actions that have been established by policies and procedures.

Which of the following is not one of the underlying principles of an effective control environment as developed by COSO?

Performing a walkthrough provides an understanding of the nature of processing in important accounting applications.

The quality of an organization's internal control affects which of the following?

A control designed to ensure that no employee is paid for more than 80 hours of sick pay is an example of which type of control?

Effective internal control requires an organization to establish an appropriate structure and clearly defined lines of responsibility and authority where everyone in the organization has equal responsibility for the effective operation of internal control.

Control activities implemented to mitigate transaction processing risks that typically affect only certain processes,transactions,accounts,and assertions are referred to as transaction or application controls.

Which of the following is the most severe?

Monitoring internal controls involves assessment by appropriate personnel of the design and operation of controls on a timely basis and taking necessary actions.

Preventive controls are designed to prevent the occurrence of a misstatement.

An auditor needs to understand a company's internal controls in order to anticipate the types of material misstatements that may occur.

Which one of the following represents a control deficiency?

Which of the following is not true of internal control as defined by COSO?

Which of the following is not included as a component of an organization's internal control structure in the COSO framework?

Preventive controls are generally more cost-efficient than detective controls.

Which of the following is not part of the control environment?

A company's internal auditing function should not be considered when assessing the effectiveness of internal controls.

Internal Control Principles One of the COSO principles of internal control requires organizations to demonstrate a commitment to attract,develop,and retain competent individuals in alignment with objectives.Discuss how this can be done.

Control activities may be implemented at the organizational level and at the transactional level.

Quality Auditing: Why It Matters

The Auditors Responsibilities Regarding Fraud and Mechanisms to Address Fraud: Regulation and Corporate Governance

Professional Legal Liability

Professional Auditing Standards and the Audit Opinion Formulation Process

Audit Evidence

Planning the Audit: Identifying and Responding to the Risks of Material Misstatement

Specialized Audit Tools: Sampling and Generalized Audit Software

Auditing the Revenue Cycle

Auditing Cash and Marketable Securities

Auditing Inventory, Goods and Services, and Accounts Payable: the Acquisition and Payment Cycle

Auditing Long-Lived Assets: Acquisition, Use, Impairment, and Disposal

Auditing Long-Term Liabilities and Stockholders Equity Transactions

Completing a Quality Audit

Audit Reports

Filters

Exam 3: Internal Control Over Financial Reporting: Responsibilities of Management and the External Auditor

A bank reconciliation is an example of which type of control?

Control activities are the component of internal control that includes control actions that have been established by policies and procedures.

Which of the following is not one of the underlying principles of an effective control environment as developed by COSO?

Performing a walkthrough provides an understanding of the nature of processing in important accounting applications.

The quality of an organization's internal control affects which of the following?

A control designed to ensure that no employee is paid for more than 80 hours of sick pay is an example of which type of control?

Effective internal control requires an organization to establish an appropriate structure and clearly defined lines of responsibility and authority where everyone in the organization has equal responsibility for the effective operation of internal control.

Control activities implemented to mitigate transaction processing risks that typically affect only certain processes,transactions,accounts,and assertions are referred to as transaction or application controls.

Which of the following is the most severe?

Monitoring internal controls involves assessment by appropriate personnel of the design and operation of controls on a timely basis and taking necessary actions.

Preventive controls are designed to prevent the occurrence of a misstatement.

An auditor needs to understand a company's internal controls in order to anticipate the types of material misstatements that may occur.

Which one of the following represents a control deficiency?

Which of the following is not true of internal control as defined by COSO?

Which of the following is not included as a component of an organization's internal control structure in the COSO framework?

Preventive controls are generally more cost-efficient than detective controls.

Which of the following is not part of the control environment?

A company's internal auditing function should not be considered when assessing the effectiveness of internal controls.

Internal Control Principles One of the COSO principles of internal control requires organizations to demonstrate a commitment to attract,develop,and retain competent individuals in alignment with objectives.Discuss how this can be done.

Control activities may be implemented at the organizational level and at the transactional level.

Quality Auditing: Why It Matters

The Auditors Responsibilities Regarding Fraud and Mechanisms to Address Fraud: Regulation and Corporate Governance

Professional Legal Liability

Professional Auditing Standards and the Audit Opinion Formulation Process

Audit Evidence

Planning the Audit: Identifying and Responding to the Risks of Material Misstatement

Specialized Audit Tools: Sampling and Generalized Audit Software

Auditing the Revenue Cycle

Auditing Cash and Marketable Securities

Auditing Inventory, Goods and Services, and Accounts Payable: the Acquisition and Payment Cycle

Auditing Long-Lived Assets: Acquisition, Use, Impairment, and Disposal

Auditing Long-Term Liabilities and Stockholders Equity Transactions

Completing a Quality Audit

Audit Reports

Filters