Question 1

All of the following are components of internal control, except for:

Accepted Answer

A)  monitoring of controls. 
B)  the control environment. 
C)  audit committees. 
D)  the information system. 
A)  monitoring of controls. 
B)  the control environment. 
C)  audit committees. 
D)  the information system.

Question 2

Which of the following is an inherent limitation of internal control?

Accepted Answer

A)  a control within a software program being overridden or disabled 
B)  human error that results in a breakdown in internal control 
C)  collusion by two or more individuals to circumvent a control 
D)  all of the above 
A)  a control within a software program being overridden or disabled 
B)  human error that results in a breakdown in internal control 
C)  collusion by two or more individuals to circumvent a control 
D)  all of the above

Question 3

Flowcharts involve:

Accepted Answer

A)  the auditor summarizing in boxes each step of a transaction from start to finish. 
B)  the auditor describing in words each step of the flow of transactions from start to finish. 
C)  both a and b. 
D)  none of the above. 
A)  the auditor summarizing in boxes each step of a transaction from start to finish. 
B)  the auditor describing in words each step of the flow of transactions from start to finish. 
C)  both a and b. 
D)  none of the above.

Question 4

An internal control exception is an observed condition that provides evidence that the control
being tested did not operate as intended.

Accepted Answer

A) True 
 B)False

Question 5

When Vanessa Lanthier reviewed the different key activities in the marketing department of a wholesaler of jewellery, she was performing an entity level review of:

Accepted Answer

A)  monitoring controls. 
B)  the control environment. 
C)  internal controls. 
D)  the risk assessment process. 
A)  monitoring controls. 
B)  the control environment. 
C)  internal controls. 
D)  the risk assessment process.

Question 6

Explain the seven generally accepted objectives of internal control activities and identify the relevant assertions.

Accepted Answer

The internal control objectives are matc

Question 7

Anwar Maris is considering whether to use a checklist or narrative approach to describing the purchasing system of an environmental engineering company. What part of the audit
Process is he involved in?

Accepted Answer

A)  documenting internal controls 
B)  risk assessment of company 
C)  review of control environment 
D)  none of the above 
A)  documenting internal controls 
B)  risk assessment of company 
C)  review of control environment 
D)  none of the above

Question 8

What are the most common forms of documentation used by auditors to document their understanding of internal controls?

Accepted Answer

The most common forms of documentation i

Question 9

Stanley Morgan has learned that it is important to be aware of the attitude and actions of management and those charged with governance concerning the entity's internal control and its
Importance in the entity. This best describes dealing with

Accepted Answer

A)  a key control objective. 
B)  the control environment. 
C)  mitigation of audit risk. 
D)  financial statement assertions. 
A)  a key control objective. 
B)  the control environment. 
C)  mitigation of audit risk. 
D)  financial statement assertions.

Question 10

The internal control objective of 'classified' means there are controls in place to ensure that:

Accepted Answer

A)  fictitious or duplicate transactions are not included in the books of an organization. 
B)  correct amounts are assigned to transactions. 
C)  transactions are recorded in the correct accounting period. 
D)  transactions are charged and allocated to the correct general ledger account. 
A)  fictitious or duplicate transactions are not included in the books of an organization. 
B)  correct amounts are assigned to transactions. 
C)  transactions are recorded in the correct accounting period. 
D)  transactions are charged and allocated to the correct general ledger account.

Question 11

One of the elements of an entity's control environment is management's philosophy and
operating style.

Accepted Answer

A) True 
 B)False

Question 12

Control risk refers to the risk that the auditor's testing procedures will not be effective in
detecting a material misstatement.

Accepted Answer

A) True 
 B)False

Question 13

Thea Lisowski decided to list several questions for herself about factors that influence management's attitudes towards internal control so as to assure herself that she could have
More confidence in management's abilities and integrity. When she was finished, which control
Environment element did she tick off on her working papers?

Accepted Answer

A)  management's philosophy and operating style 
B)  communication and enforcement of integrity and ethical values 
C)  commitment to competence 
D)  participation by those charged with governance 
A)  management's philosophy and operating style 
B)  communication and enforcement of integrity and ethical values 
C)  commitment to competence 
D)  participation by those charged with governance

Question 14

The concept that no one employee should be in a position both to perpetrate and hide errors
or fraud in the normal course of their duties is known as segregation of incompatible duties.

Accepted Answer

A) True 
 B)False

Question 15

The internal control objective of 'real' refers to controls in place to ensure that fictitious or
duplicate transactions are not included in the books and records of the organization.

Accepted Answer

A) True 
 B)False

Question 16

Marcia Salinger reviewed the following activities in the Sales cycle: She ensured that once the invoice had been created it was posted to the appropriate accounts in the sales journal and
The accounts receivable sub ledger in the appropriate accounting period and that the sales
Journal was reconciled to the general ledger accounts. These activities are part of which of the
Following sales process activities?

Accepted Answer

A)  invoicing customers 
B)  cash receipts 
C)  recording sales and trade receivables 
D)  none of the above 
A)  invoicing customers 
B)  cash receipts 
C)  recording sales and trade receivables 
D)  none of the above

Question 17

Internal control is intended to provide reasonable assurance about the achievement of an
entity's objectives.

Accepted Answer

A) True 
 B)False

Question 18

Internal control encompasses which of the following elements of an organization?

Accepted Answer

A)  processes 
B)  culture 
C)  systems 
D)  all of the above 
A)  processes 
B)  culture 
C)  systems 
D)  all of the above

Question 19

Internal control weaknesses decrease the risk of material misstatements being undetected
by management's processes and controls.

Accepted Answer

A) True 
 B)False

Question 20

An internal control exception is:

Accepted Answer

A)  only expected to exist when internal controls are effective. 
B)  an observed condition that provides evidence that the control being tested did not operate as indicated. 
C)  both a and b. 
D)  an observed condition that provides evidence that the control being tested did operate as indicated. 
A)  only expected to exist when internal controls are effective. 
B)  an observed condition that provides evidence that the control being tested did not operate as indicated. 
C)  both a and b. 
D)  an observed condition that provides evidence that the control being tested did operate as indicated.

All of the following are components of internal control, except for:

Which of the following is an inherent limitation of internal control?

Flowcharts involve:

An internal control exception is an observed condition that provides evidence that the control being tested did not operate as intended.

When Vanessa Lanthier reviewed the different key activities in the marketing department of a wholesaler of jewellery, she was performing an entity level review of:

Explain the seven generally accepted objectives of internal control activities and identify the relevant assertions.

Anwar Maris is considering whether to use a checklist or narrative approach to describing the purchasing system of an environmental engineering company. What part of the audit Process is he involved in?

What are the most common forms of documentation used by auditors to document their understanding of internal controls?

Stanley Morgan has learned that it is important to be aware of the attitude and actions of management and those charged with governance concerning the entity's internal control and its Importance in the entity. This best describes dealing with

The internal control objective of 'classified' means there are controls in place to ensure that:

One of the elements of an entity's control environment is management's philosophy and operating style.

Control risk refers to the risk that the auditor's testing procedures will not be effective in detecting a material misstatement.

The concept that no one employee should be in a position both to perpetrate and hide errors or fraud in the normal course of their duties is known as segregation of incompatible duties.

The internal control objective of 'real' refers to controls in place to ensure that fictitious or duplicate transactions are not included in the books and records of the organization.

Internal control is intended to provide reasonable assurance about the achievement of an entity's objectives.

Internal control encompasses which of the following elements of an organization?

Internal control weaknesses decrease the risk of material misstatements being undetected by management's processes and controls.

An internal control exception is:

Introduction and Overview of Audit and Assurance

Ethics, Legal Liability and Client Acceptance

Audit Planning I

Audit Planning II

Audit Evidence

Sampling and Overview of the Risk Response Phase of the Audit

Execution of the Audittesting of Controls

Execution of the Auditperforming Substantive Procedures

Substantive Testing and Balance Sheet Accounts

Substantive Testing and Income Statement Accounts

Completing and Reporting on the Audit

Filters

Exam 7: Gaining an Understanding of the Clients System of Internal Controls

All of the following are components of internal control, except for:

Which of the following is an inherent limitation of internal control?

Flowcharts involve:

An internal control exception is an observed condition that provides evidence that the control being tested did not operate as intended.

When Vanessa Lanthier reviewed the different key activities in the marketing department of a wholesaler of jewellery, she was performing an entity level review of:

Explain the seven generally accepted objectives of internal control activities and identify the relevant assertions.

Anwar Maris is considering whether to use a checklist or narrative approach to describing the purchasing system of an environmental engineering company. What part of the audit Process is he involved in?

What are the most common forms of documentation used by auditors to document their understanding of internal controls?

Stanley Morgan has learned that it is important to be aware of the attitude and actions of management and those charged with governance concerning the entity's internal control and its Importance in the entity. This best describes dealing with

The internal control objective of 'classified' means there are controls in place to ensure that:

One of the elements of an entity's control environment is management's philosophy and operating style.

Control risk refers to the risk that the auditor's testing procedures will not be effective in detecting a material misstatement.

The concept that no one employee should be in a position both to perpetrate and hide errors or fraud in the normal course of their duties is known as segregation of incompatible duties.

The internal control objective of 'real' refers to controls in place to ensure that fictitious or duplicate transactions are not included in the books and records of the organization.

Internal control is intended to provide reasonable assurance about the achievement of an entity's objectives.

Internal control encompasses which of the following elements of an organization?

Internal control weaknesses decrease the risk of material misstatements being undetected by management's processes and controls.

An internal control exception is:

Introduction and Overview of Audit and Assurance

Ethics, Legal Liability and Client Acceptance

Audit Planning I

Audit Planning II

Audit Evidence

Sampling and Overview of the Risk Response Phase of the Audit

Execution of the Audittesting of Controls

Execution of the Auditperforming Substantive Procedures

Substantive Testing and Balance Sheet Accounts

Substantive Testing and Income Statement Accounts

Completing and Reporting on the Audit

Filters