Question 1

Narratives involve the auditor describing in words each step of the flow of transactions from start to finish.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following is an element of the control environment?

Accepted Answer

A) Participation by those charged with governance 
B) Commitment to competence 
C) Segregation of duties 
D) Both a and b 
A) Participation by those charged with governance 
B) Commitment to competence 
C) Segregation of duties 
D) Both a and b

Question 3

What are control activities and explain the major categories of them?

Accepted Answer

Control activities are policies and proc

Question 4

If controls are in place to ensure that transactions are recorded in the accounting period,this satisfies which internal control objective?

Accepted Answer

A) Real 
B) Valued 
C) Posted 
D) Timely 
A) Real 
B) Valued 
C) Posted 
D) Timely

Question 5

What have been the major impacts on companies and auditors of section 404 of the Sarbanes-Oxley Act (2002)? Has this section improved the quality of companies' internal controls?

Accepted Answer

Section 404 of the Sarbanes-Oxley Act (2

Question 6

Which of the following statements relating to control activities is in?

Accepted Answer

A) They are policies and procedures that help make sure management's directives are carried out 
B) They help guarantee that necessary actions are taken to address risks impacting the achievement of the organisation's objectives 
C) They have various objectives and are applied at various organisational and functional levels 
D) They include management's philosophy and operating style 
A) They are policies and procedures that help make sure management's directives are carried out 
B) They help guarantee that necessary actions are taken to address risks impacting the achievement of the organisation's objectives 
C) They have various objectives and are applied at various organisational and functional levels 
D) They include management's philosophy and operating style

Question 7

The purpose of an auditor's management letter is to inform the client of the auditor's recommendations for improving its internal controls.

Accepted Answer

A) True 
 B)False

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

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 10

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

Accepted Answer

A) True 
 B)False

Question 11

Why are internal controls so important to companies? What are the implications for companies if their internal controls are not operating effectively?

Accepted Answer

Internal controls are important to compa

Question 12

Performance reviews are control activities that include:

Accepted Answer

A) reviews of actual performance versus budgets 
B) authorisation for access to computer programs 
C) periodic counting and comparison with amounts shown on control records 
D) segregating incompatible duties 
A) reviews of actual performance versus budgets 
B) authorisation for access to computer programs 
C) periodic counting and comparison with amounts shown on control records 
D) segregating incompatible duties

Question 13

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

Accepted Answer

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

Question 14

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

Accepted Answer

The internal control objectives are matc

Question 15

The control environment does not:

Accepted Answer

A) refer to the policies and procedures that help make sure management's directives are carried out 
B) set the tone of an entity 
C) set the foundation for all other components of internal control 
D) influence the control consciousness of employees 
A) refer to the policies and procedures that help make sure management's directives are carried out 
B) set the tone of an entity 
C) set the foundation for all other components of internal control 
D) influence the control consciousness of employees

Question 16

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 organisation.

Accepted Answer

A) True 
 B)False

Question 17

Checklists and preformatted questionnaires are particularly helpful:

Accepted Answer

A) in industries that the auditor may not personally be familiar with auditing 
B) when control risk is high 
C) when less experienced auditors find it difficult to identify which are the critical controls 
D) both a and c 
A) in industries that the auditor may not personally be familiar with auditing 
B) when control risk is high 
C) when less experienced auditors find it difficult to identify which are the critical controls 
D) both a and c

Question 18

Explain the key elements of the control environment.

Accepted Answer

The control environment also sets the fo

Question 19

The inherent limitations of internal control include the possibility of collusion by two or more individuals to circumvent a control.

Accepted Answer

A) True 
 B)False

Question 20

Significant professional judgement is never required to decide whether an identified internal control weakness is significant enough to warrant communicating to management.

Accepted Answer

A) True 
 B)False

Narratives involve the auditor describing in words each step of the flow of transactions from start to finish.

Which of the following is an element of the control environment?

What are control activities and explain the major categories of them?

If controls are in place to ensure that transactions are recorded in the accounting period,this satisfies which internal control objective?

What have been the major impacts on companies and auditors of section 404 of the Sarbanes-Oxley Act (2002)? Has this section improved the quality of companies' internal controls?

Which of the following statements relating to control activities is in?

The purpose of an auditor's management letter is to inform the client of the auditor's recommendations for improving its internal controls.

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

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

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

Why are internal controls so important to companies? What are the implications for companies if their internal controls are not operating effectively?

Performance reviews are control activities that include:

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

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

The control environment does not:

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 organisation.

Checklists and preformatted questionnaires are particularly helpful:

Explain the key elements of the control environment.

The inherent limitations of internal control include the possibility of collusion by two or more individuals to circumvent a control.

Significant professional judgement is never required to decide whether an identified internal control weakness is significant enough to warrant communicating to management.

Introduction and Overview of Audit and Assurance

Ethics,legal Liability and Client Acceptance

Risk Assessment I

Risk Assessment II

Audit Evidence

Sampling and Overview of the Risk Response Phase of the Audit

Execution of the Audit Testing of Controls

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 6: Gaining an Understanding of the Clients System of Internal Controls

Narratives involve the auditor describing in words each step of the flow of transactions from start to finish.

Which of the following is an element of the control environment?

What are control activities and explain the major categories of them?

If controls are in place to ensure that transactions are recorded in the accounting period,this satisfies which internal control objective?

What have been the major impacts on companies and auditors of section 404 of the Sarbanes-Oxley Act (2002)? Has this section improved the quality of companies' internal controls?

Which of the following statements relating to control activities is in?

The purpose of an auditor's management letter is to inform the client of the auditor's recommendations for improving its internal controls.

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

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

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

Why are internal controls so important to companies? What are the implications for companies if their internal controls are not operating effectively?

Performance reviews are control activities that include:

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

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

The control environment does not:

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 organisation.

Checklists and preformatted questionnaires are particularly helpful:

Explain the key elements of the control environment.

The inherent limitations of internal control include the possibility of collusion by two or more individuals to circumvent a control.

Significant professional judgement is never required to decide whether an identified internal control weakness is significant enough to warrant communicating to management.

Introduction and Overview of Audit and Assurance

Ethics,legal Liability and Client Acceptance

Risk Assessment I

Risk Assessment II

Audit Evidence

Sampling and Overview of the Risk Response Phase of the Audit

Execution of the Audit Testing of Controls

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