Question 1

The objective of control procedures is to process transactions correctly.

Accepted Answer

A) True 
 B)False  True

Question 2

Validity refers to ________.

Accepted Answer

A)  ensuring that transactions are not omitted from accounting records 
B)  ensuring that recorded transactions should have been recorded 
C)  ensuring that all recorded transactions have been approved before recording 
D)  ensuring that all recorded transactions have been recorded at the right dollar amount 
A)  ensuring that transactions are not omitted from accounting records 
B)  ensuring that recorded transactions should have been recorded 
C)  ensuring that all recorded transactions have been approved before recording 
D)  ensuring that all recorded transactions have been recorded at the right dollar amount B

Question 3

The auditor's primary purpose for evaluating internal control is to ________.

Accepted Answer

A)  help design of the final audit plan 
B)  help management design internal control systems 
C)  help judge how much control is necessary 
D)  help determine much business risk is acceptable 
A)  help design of the final audit plan 
B)  help management design internal control systems 
C)  help judge how much control is necessary 
D)  help determine much business risk is acceptable A

Question 4

One control benefit of an IT system is that it ________.

Accepted Answer

A)  is efficient at processing large, unusual, or non-recurring transactions 
B)  can monitor the effectiveness of automated controls 
C)  adjusts rapidly to changing business processes 
D)  reduces the risk of controls being overridden 
A)  is efficient at processing large, unusual, or non-recurring transactions 
B)  can monitor the effectiveness of automated controls 
C)  adjusts rapidly to changing business processes 
D)  reduces the risk of controls being overridden

Question 5

General controls, like environmental controls, are primarily preventive in nature.

Accepted Answer

A) True 
 B)False

Question 6

What is a "walk through" test?

Accepted Answer

A)  A means of ensuring that transactions are processed as described in the control system flowchart. 
B)  A test of physical security over access to computer rooms. 
C)  A computer-assisted technique for processing client data on a different system. 
D)  An audit procedure carried out at the planning stage of an audit. 
A)  A means of ensuring that transactions are processed as described in the control system flowchart. 
B)  A test of physical security over access to computer rooms. 
C)  A computer-assisted technique for processing client data on a different system. 
D)  An audit procedure carried out at the planning stage of an audit.

Question 7

At the planning stage, the auditor's goal is to ________.

Accepted Answer

A)  select the most effective set of evidence-gathering techniques 
B)  maximize audit fees 
C)  select the most cost-effective set of evidence-gathering techniques 
D)  minimize field work at remote locations 
A)  select the most effective set of evidence-gathering techniques 
B)  maximize audit fees 
C)  select the most cost-effective set of evidence-gathering techniques 
D)  minimize field work at remote locations

Question 8

What are the most cost-effective types of controls over data?

Accepted Answer

A)  Design controls. 
B)  Batch controls. 
C)  Input controls. 
D)  Monitoring controls. 
A)  Design controls. 
B)  Batch controls. 
C)  Input controls. 
D)  Monitoring controls.

Question 9

For audits of financial institutions, auditors have a well-being reporting requirement. List four matters that must be reported under federal institutions legislation.

Accepted Answer

Examples of reportable conditions includ

Question 10

The auditor's control risk assessment will affect the procedures to be included in the audit.

Accepted Answer

A) True 
 B)False

Question 11

An auditor has uncovered suspicious expense reimbursements paid to the chief executive officer of its audit client. What should the auditor do?

Accepted Answer

A)  Discuss the matter with the chief executive officer. 
B)  Report the matter in writing to the chief financial officer. 
C)  Report the matter in writing to the audit committee. 
D)  Report the matter in writing to the federal government. 
A)  Discuss the matter with the chief executive officer. 
B)  Report the matter in writing to the chief financial officer. 
C)  Report the matter in writing to the audit committee. 
D)  Report the matter in writing to the federal government.

Question 12

Which of the following statements is true?

Accepted Answer

A)  Testing of controls is the most cost-efficient way of designing each audit. 
B)  Substantive testing is the most cost-efficient way of designing each audit. 
C)  As the work of testing of controls increases, the cost of substantive work increases. 
D)  There is a point where further testing of controls becomes more expensive than performing substantive tests. 
A)  Testing of controls is the most cost-efficient way of designing each audit. 
B)  Substantive testing is the most cost-efficient way of designing each audit. 
C)  As the work of testing of controls increases, the cost of substantive work increases. 
D)  There is a point where further testing of controls becomes more expensive than performing substantive tests.

Question 13

Control tests should be applied to samples of transactions and control procedures ________.

Accepted Answer

A)  that occurred during the interim audit so that they provide direct auditor's knowledge 
B)  selected by management as being representative of all transactions processed 
C)  throughout the period being audited 
D)  that occur primarily close to reporting period ends such as year-end or quarter-end 
A)  that occurred during the interim audit so that they provide direct auditor's knowledge 
B)  selected by management as being representative of all transactions processed 
C)  throughout the period being audited 
D)  that occur primarily close to reporting period ends such as year-end or quarter-end

Question 14

Which of the following is true regarding the financial assertions?

Accepted Answer

A)  All assertions can be proved using only substantive procedures, but it would be too costly. 
B)  Some assertions are virtually impossible to prove without some evaluation of control effectiveness. 
C)  Some assertions can be proved using only an evaluation of control effectiveness. 
D)  The evaluation of control effectiveness is only used because it is more efficient than using only substantive procedures. 
A)  All assertions can be proved using only substantive procedures, but it would be too costly. 
B)  Some assertions are virtually impossible to prove without some evaluation of control effectiveness. 
C)  Some assertions can be proved using only an evaluation of control effectiveness. 
D)  The evaluation of control effectiveness is only used because it is more efficient than using only substantive procedures.

Question 15

Key controls are those ________.

Accepted Answer

A)  over significant risks 
B)  over physical access 
C)  on which the auditor intends to rely 
D)  designed by the audit committee to prevent management fraud 
A)  over significant risks 
B)  over physical access 
C)  on which the auditor intends to rely 
D)  designed by the audit committee to prevent management fraud

Question 16

The internal control objective of ensuring that all sales on credit are recorded in accordance with GAAP is ________.

Accepted Answer

A)  accuracy 
B)  classification 
C)  accounting 
D)  proper period 
A)  accuracy 
B)  classification 
C)  accounting 
D)  proper period

Question 17

The most important feature of control is the documentation of the policies and procedures.

Accepted Answer

A) True 
 B)False

Question 18

Below are the six internal control objectives.
A) Validity
B) Completeness
C) Authorization
D) Accuracy
E) Classification
F) Proper period cutoff
For each of the following control procedures, identify the internal control objective that applies and place the correct letter in the space provided.
____ 1. Match shipping documents to sales invoices before recording the transaction in the sales journal.
____ 2. Ensure that the sales invoices are recorded in the correct month.
____ 3. The sales manager must approve any discounts taken after the discount period.
____ 4. Compare the quantity shipped per the shipping documents to the quantity billed per the sales invoice, check prices to approved price lists, and recalculate extensions and totals before the recording the sale.
____ 5. Account for numerical sequence of pre-numbered shipping documents.

Accepted Answer

1. A
2. F

Question 19

List and give some examples of five security components of a well-designed IT system.

Accepted Answer

i. Network security refers to network se

Question 20

Intent is something that the auditor can observe and use in deciding whether a misstatement is an error or a fraud.

Accepted Answer

A) True 
 B)False

The objective of control procedures is to process transactions correctly.

Validity refers to ________.

The auditor's primary purpose for evaluating internal control is to ________.

One control benefit of an IT system is that it ________.

General controls, like environmental controls, are primarily preventive in nature.

What is a "walk through" test?

At the planning stage, the auditor's goal is to ________.

What are the most cost-effective types of controls over data?

For audits of financial institutions, auditors have a well-being reporting requirement. List four matters that must be reported under federal institutions legislation.

The auditor's control risk assessment will affect the procedures to be included in the audit.

An auditor has uncovered suspicious expense reimbursements paid to the chief executive officer of its audit client. What should the auditor do?

Which of the following statements is true?

Control tests should be applied to samples of transactions and control procedures ________.

Which of the following is true regarding the financial assertions?

Key controls are those ________.

The internal control objective of ensuring that all sales on credit are recorded in accordance with GAAP is ________.

The most important feature of control is the documentation of the policies and procedures.

List and give some examples of five security components of a well-designed IT system.

Intent is something that the auditor can observe and use in deciding whether a misstatement is an error or a fraud.

Introduction to Auditing

Auditors Professional Roles and Responsibilities

Auditors Ethical and Legal Responsibilities

Reports on Audited Financial Statements

Preliminary Audit Planning: Understanding the Auditees Business

Assessing Risks in an Audit Engagement

Internal Control Over Financial Reporting

Audit Evidence and Assurance

Audit Sampling

The Revenues, Receivables, and Receipts Process and Cash Account Balance

The Purchases, Payables, and Payments Process

Payroll and Production Processes

The Finance and Investment Process

Completing the Audit Work

Applying Professional Judgment to Form the Audit Opinion and Issue Theaudit Report

Other Public Accounting Services and Reportsreviews and Compilations

Professional Rules of Conduct Details and Auditor Responsibilities

Part I the Audit of Accounting Estimates: Basic Material Relating to Accountingestimates

Legal Liability Cases

Other Professional Accounting Services and Reports, Including Fraud

Filters

Exam 9: Control Assessment and Testing

The objective of control procedures is to process transactions correctly.

Validity refers to ________.

The auditor's primary purpose for evaluating internal control is to ________.

One control benefit of an IT system is that it ________.

General controls, like environmental controls, are primarily preventive in nature.

What is a "walk through" test?

At the planning stage, the auditor's goal is to ________.

What are the most cost-effective types of controls over data?

For audits of financial institutions, auditors have a well-being reporting requirement. List four matters that must be reported under federal institutions legislation.

The auditor's control risk assessment will affect the procedures to be included in the audit.

An auditor has uncovered suspicious expense reimbursements paid to the chief executive officer of its audit client. What should the auditor do?

Which of the following statements is true?

Control tests should be applied to samples of transactions and control procedures ________.

Which of the following is true regarding the financial assertions?

Key controls are those ________.

The internal control objective of ensuring that all sales on credit are recorded in accordance with GAAP is ________.

The most important feature of control is the documentation of the policies and procedures.

List and give some examples of five security components of a well-designed IT system.

Intent is something that the auditor can observe and use in deciding whether a misstatement is an error or a fraud.

Introduction to Auditing

Auditors Professional Roles and Responsibilities

Auditors Ethical and Legal Responsibilities

Reports on Audited Financial Statements

Preliminary Audit Planning: Understanding the Auditees Business

Assessing Risks in an Audit Engagement

Internal Control Over Financial Reporting

Audit Evidence and Assurance

Audit Sampling

The Revenues, Receivables, and Receipts Process and Cash Account Balance

The Purchases, Payables, and Payments Process

Payroll and Production Processes

The Finance and Investment Process

Completing the Audit Work

Applying Professional Judgment to Form the Audit Opinion and Issue Theaudit Report

Other Public Accounting Services and Reportsreviews and Compilations

Professional Rules of Conduct Details and Auditor Responsibilities

Part I the Audit of Accounting Estimates: Basic Material Relating to Accountingestimates

Legal Liability Cases

Other Professional Accounting Services and Reports, Including Fraud

Filters