Question 1

The two main objectives of internal controls are:

Accepted Answer

A)  to support the automated parts of the business in the functioning of the controls in place. 
B)  to prevent or detect misstatements in the financial statements. 
C)  both a and b 
D)  none of the above. 
A)  to support the automated parts of the business in the functioning of the controls in place. 
B)  to prevent or detect misstatements in the financial statements. 
C)  both a and b 
D)  none of the above. B

Question 2

Benchmarking is:

Accepted Answer

A)  based on the premise that a computer will continue to perform any given procedures in exactly the same way until such time as the program is changed. 
B)  an audit testing strategy that can be used to carry forward the benefit of certain application controls testing into future audit periods. 
C)  both a and b 
D)  none of the above. 
A)  based on the premise that a computer will continue to perform any given procedures in exactly the same way until such time as the program is changed. 
B)  an audit testing strategy that can be used to carry forward the benefit of certain application controls testing into future audit periods. 
C)  both a and b 
D)  none of the above. C

Question 3

The greater the degree of reliance on an internal control, the less they test the control to provide the required assurance.

Accepted Answer

A) True 
 B)False  True

Question 4

Which of the following statements is correct?

Accepted Answer

A)  Tests of account balances can often provide evidence about the continued functioning of controls. 
B)  An ineffective entity-level control environment may allow the auditor to limit their tests of controls to enquiry and observation. 
C)  Auditors do not need to investigate any control exceptions identified during their testing. 
D)  Tests of account balances never provide evidence about the continued functioning of controls. 
A)  Tests of account balances can often provide evidence about the continued functioning of controls. 
B)  An ineffective entity-level control environment may allow the auditor to limit their tests of controls to enquiry and observation. 
C)  Auditors do not need to investigate any control exceptions identified during their testing. 
D)  Tests of account balances never provide evidence about the continued functioning of controls.

Question 5

The major limitation with the observation technique for testing controls is that:

Accepted Answer

A)  the employee may not be truthful in telling the auditor how the control procedure is performed. 
B)  the employee may perform the control procedure more diligently when they know they are being observed. 
C)  Both a and b 
D)  none of the above. 
A)  the employee may not be truthful in telling the auditor how the control procedure is performed. 
B)  the employee may perform the control procedure more diligently when they know they are being observed. 
C)  Both a and b 
D)  none of the above.

Question 6

Indicate whether you agree or disagree with the following statements and explain your reasoning.
a) The audit senior was explaining how different controls work: "Detective controls can be applied to each transaction during normal processing to avoid errors occurring."
b) The public accountant was reviewing the audit program and was convinced that the following item did not belong in the IT General Controls (ITGC) part of her audit program: "Program change controls - only appropriately authorized, tested and approved changes are made to applications, interfaces, databases and operating systems. All changes are documented so systems documentation is up to date."
c) The techniques for testing are made up of enquiry, observation, inspection of physical evidence and re-performance. Inspection of physical evidence relies on the auditor testing the physical evidence to verify that a control has been performed properly.
d) The manager of a large client realizes that when testing controls, either statistically based sampling techniques or professional judgment can be used to determine the extent of testing. One of the factors to con?sider when deciding the extent of testing should include the competence of the person who performs the control.

Accepted Answer

a) Disagree. The audit senior is describ

Question 7

A sampling technique used to reach a conclusion about a population in terms of a rate of occurrence is known as:

Accepted Answer

A)  dollar unit sampling. 
B)  random sampling. 
C)  attribute sampling. 
D)  haphazard sampling. 
A)  dollar unit sampling. 
B)  random sampling. 
C)  attribute sampling. 
D)  haphazard sampling.

Question 8

An example of a program change control is:

Accepted Answer

A)  the accounts receivable clerk does not have access to the cash payments application. 
B)  regular and timely back-ups of data. 
C)  program change forms must be authorized by the IT manager. 
D)  all of the above. 
A)  the accounts receivable clerk does not have access to the cash payments application. 
B)  regular and timely back-ups of data. 
C)  program change forms must be authorized by the IT manager. 
D)  all of the above.

Question 9

In trying to determine whether there is a need for additional detailed tests of controls, which of the following factors are considered?

Accepted Answer

A)  evidence provided by other tests 
B)  changes in the overall control environment 
C)  results of enquiries and observations 
D)  all of the above 
A)  evidence provided by other tests 
B)  changes in the overall control environment 
C)  results of enquiries and observations 
D)  all of the above

Question 10

Discuss the factors that relate to the likelihood that an internal control operates as intended.

Accepted Answer

Several factors affect the perception of

Question 11

It is important that detective controls:

Accepted Answer

A)  identify all potentially significant errors. 
B)  completely and accurately capture all data. 
C)  are performed on a consistent and regular basis. 
D)  all of the above. 
A)  identify all potentially significant errors. 
B)  completely and accurately capture all data. 
C)  are performed on a consistent and regular basis. 
D)  all of the above.

Question 12

Tracing certain amounts on the bank reconciliation to the accounting records is an example of which technique for testing controls?

Accepted Answer

A)  observation 
B)  enquiry 
C)  inspection of physical evidence 
D)  re-performance 
A)  observation 
B)  enquiry 
C)  inspection of physical evidence 
D)  re-performance

Question 13

Lucia Dottore, an audit senior, performed a review of certain application controls at a clothing manufacturing client. Which one of these controls is an input control?

Accepted Answer

A)  Reconciliation of totals where input totals are compared to the output totals. 
B)  Output is printed to a secure printer where access is limited. 
C)  Reasonable checks: actual data is compared to expected data for reasonableness. 
D)  None of the above. 
A)  Reconciliation of totals where input totals are compared to the output totals. 
B)  Output is printed to a secure printer where access is limited. 
C)  Reasonable checks: actual data is compared to expected data for reasonableness. 
D)  None of the above.

Question 14

Tracing certain amounts on the bank reconciliation to the accounting records is an example of inspection of physical evidence.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following would not be included in a test of control working paper?

Accepted Answer

A)  the purpose of the test 
B)  a conclusion about whether the account balance is materially misstated 
C)  the work performed 
D)  the findings/results of the testing 
A)  the purpose of the test 
B)  a conclusion about whether the account balance is materially misstated 
C)  the work performed 
D)  the findings/results of the testing

Question 16

What are the main items commonly included in tests of controls working papers?

Accepted Answer

In tests of controls working papers, the

Question 17

Enquiry involves the auditor:

Accepted Answer

A)  using questioning skills to determine how the control is completed and whether it appears to have been carried out properly and on a timely basis. 
B)  re-performing the control to test its effectiveness. 
C)  the auditor observing the actual control being performed. 
D)  testing the physical evidence to verify that a control has been performed properly. 
A)  using questioning skills to determine how the control is completed and whether it appears to have been carried out properly and on a timely basis. 
B)  re-performing the control to test its effectiveness. 
C)  the auditor observing the actual control being performed. 
D)  testing the physical evidence to verify that a control has been performed properly.

Question 18

The senior auditor has no physical evidence that a control was performed, who performed it, or how effectively it was performed. What is the nature of this control?

Accepted Answer

A)  internal control 
B)  entity-level control 
C)  detective control 
D)  preventive control 
A)  internal control 
B)  entity-level control 
C)  detective control 
D)  preventive control

Question 19

Millicent Vonareva was reviewing her IT General Controls program for her client visit. She noticed an item that she thought did not belong in her "Controls to prevent unauthorized access to data" section of the program. Which item did not belong there?

Accepted Answer

A)  Data files and critical applications are regularly backed up in offsite locations. 
B)  Program changes are subject to formal change management procedures. 
C)  Policies exist to ensure departing employees are denied access to software programs and databases. 
D)  Aall the above items belonged in the "controls to prevent unauthorized access to data" section of the program. 
A)  Data files and critical applications are regularly backed up in offsite locations. 
B)  Program changes are subject to formal change management procedures. 
C)  Policies exist to ensure departing employees are denied access to software programs and databases. 
D)  Aall the above items belonged in the "controls to prevent unauthorized access to data" section of the program.

Question 20

An example of a purely manual control is a locked stock cage for high dollar-value items.

Accepted Answer

A) True 
 B)False

The two main objectives of internal controls are:

Benchmarking is:

The greater the degree of reliance on an internal control, the less they test the control to provide the required assurance.

Which of the following statements is correct?

The major limitation with the observation technique for testing controls is that:

A sampling technique used to reach a conclusion about a population in terms of a rate of occurrence is known as:

An example of a program change control is:

In trying to determine whether there is a need for additional detailed tests of controls, which of the following factors are considered?

Discuss the factors that relate to the likelihood that an internal control operates as intended.

It is important that detective controls:

Tracing certain amounts on the bank reconciliation to the accounting records is an example of which technique for testing controls?

Lucia Dottore, an audit senior, performed a review of certain application controls at a clothing manufacturing client. Which one of these controls is an input control?

Tracing certain amounts on the bank reconciliation to the accounting records is an example of inspection of physical evidence.

Which of the following would not be included in a test of control working paper?

What are the main items commonly included in tests of controls working papers?

Enquiry involves the auditor:

The senior auditor has no physical evidence that a control was performed, who performed it, or how effectively it was performed. What is the nature of this control?

Millicent Vonareva was reviewing her IT General Controls program for her client visit. She noticed an item that she thought did not belong in her "Controls to prevent unauthorized access to data" section of the program. Which item did not belong there?

An example of a purely manual control is a locked stock cage for high dollar-value items.

Introduction and Overview of Audit and Assurance

Ethics, Legal Liability and Client Acceptance

Risk Assessment I

Risk Assessment II

Audit Evidence

Gaining an Understanding of the Clients System of Internal Controls

Sampling and Overview of the Risk Response Phase of the Audit

Execution of the Audit Performing Substantive Procedures

Substantive Testing and Balance Sheet Accounts

Substantive Testing and Income Statement Accounts

Completing and Reporting on the Audit

Filters

Exam 8: Execution of the Audit Testing of Controls

The two main objectives of internal controls are:

Benchmarking is:

The greater the degree of reliance on an internal control, the less they test the control to provide the required assurance.

Which of the following statements is correct?

The major limitation with the observation technique for testing controls is that:

A sampling technique used to reach a conclusion about a population in terms of a rate of occurrence is known as:

An example of a program change control is:

In trying to determine whether there is a need for additional detailed tests of controls, which of the following factors are considered?

Discuss the factors that relate to the likelihood that an internal control operates as intended.

It is important that detective controls:

Tracing certain amounts on the bank reconciliation to the accounting records is an example of which technique for testing controls?

Lucia Dottore, an audit senior, performed a review of certain application controls at a clothing manufacturing client. Which one of these controls is an input control?

Tracing certain amounts on the bank reconciliation to the accounting records is an example of inspection of physical evidence.

Which of the following would not be included in a test of control working paper?

What are the main items commonly included in tests of controls working papers?

Enquiry involves the auditor:

The senior auditor has no physical evidence that a control was performed, who performed it, or how effectively it was performed. What is the nature of this control?

Millicent Vonareva was reviewing her IT General Controls program for her client visit. She noticed an item that she thought did not belong in her "Controls to prevent unauthorized access to data" section of the program. Which item did not belong there?

An example of a purely manual control is a locked stock cage for high dollar-value items.

Introduction and Overview of Audit and Assurance

Ethics, Legal Liability and Client Acceptance

Risk Assessment I

Risk Assessment II

Audit Evidence

Gaining an Understanding of the Clients System of Internal Controls

Sampling and Overview of the Risk Response Phase of the Audit

Execution of the Audit Performing Substantive Procedures

Substantive Testing and Balance Sheet Accounts

Substantive Testing and Income Statement Accounts

Completing and Reporting on the Audit

Filters