Question 1

Which assertion is not specifically addressed by internal control objectives?

Accepted Answer

A)  cut-off 
B)  presentation 
C)  completeness 
D)  existence 
A)  cut-off 
B)  presentation 
C)  completeness 
D)  existence

Question 2

Anwar Maris is considering whether to use a checklist or narrative approach to describe 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 3

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

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

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 6

Susan Struthers will be reviewing those controls that stop fraud or errors from occurring. This is an example of a review of

Accepted Answer

A)  detective controls. 
B)  preventive controls. 
C)  entity-level controls. 
D)  transaction-level controls. 
A)  detective controls. 
B)  preventive controls. 
C)  entity-level controls. 
D)  transaction-level controls.

Question 7

If tests of controls indicate that internal controls are not as effective as originally assessed, the auditor will

Accepted Answer

A)  decrease assessment of control risk. 
B)  increase assessment of detection risk. 
C)  place less reliance on substantive procedures. 
D)  none of the above 
A)  decrease assessment of control risk. 
B)  increase assessment of detection risk. 
C)  place less reliance on substantive procedures. 
D)  none of the above

Question 8

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 9

Which of the following would not be included in a test of a 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 10

Which of the following statements about internal control is incorrect?

Accepted Answer

A)  Internal control is a very broad concept. 
B)  Internal control eliminates the possibility of fraud and error. 
C)  Internal control encompasses all of the elements of an organization. 
D)  Internal control provides reasonable assurance about the achievement of the entity's objectives. 
A)  Internal control is a very broad concept. 
B)  Internal control eliminates the possibility of fraud and error. 
C)  Internal control encompasses all of the elements of an organization. 
D)  Internal control provides reasonable assurance about the achievement of the entity's objectives.

Question 11

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 12

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 13

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

Accepted Answer

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

Question 14

Benchmarking is appropriate when

Accepted Answer

A)  a reliable trail of program changes exists. 
B)  a programmed control can be matched to a defined program within an application. 
C)  the application is stable. 
D)  all of the above 
A)  a reliable trail of program changes exists. 
B)  a programmed control can be matched to a defined program within an application. 
C)  the application is stable. 
D)  all of the above

Question 15

Audit risk is the risk that an entity's internal control system will not prevent or detect material
misstatements.

Accepted Answer

A) True 
 B)False

Question 16

CAS 230 Audit Documentation requires auditors to document each stage of the audit in their working papers. Regarding the contents of working papers, what are the specific requirements in CAS 230? Explain the importance of auditors effectively documenting the tests of controls they have performed.

Accepted Answer

CAS 230 Audit Documentation requires aud

Question 17

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

Accepted Answer

A)  timely 
B)  real 
C)  valued 
D)  posted 
A)  timely 
B)  real 
C)  valued 
D)  posted

Question 18

The control environment does not

Accepted Answer

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

Question 19

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

Accepted Answer

Several factors affect the perception of

Question 20

Explain the differences between preventive controls and detective controls.

Accepted Answer

Tests of controls (or controls testing)

Which assertion is not specifically addressed by internal control objectives?

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

Benchmarking is

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

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

Susan Struthers will be reviewing those controls that stop fraud or errors from occurring. This is an example of a review of

If tests of controls indicate that internal controls are not as effective as originally assessed, the auditor will

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

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

Which of the following statements about internal control is incorrect?

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.

Flowcharts involve

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

Benchmarking is appropriate when

Audit risk is the risk that an entity's internal control system will not prevent or detect material misstatements.

CAS 230 Audit Documentation requires auditors to document each stage of the audit in their working papers. Regarding the contents of working papers, what are the specific requirements in CAS 230? Explain the importance of auditors effectively documenting the tests of controls they have performed.

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

The control environment does not

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

Explain the differences between preventive controls and detective controls.

Introduction and Review 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 Audit Performing Substantive Procedures

Auditing Sales and Receivables

Auditing Purchases, Payables and Payroll

Auditing Inventories and PPE

Auditing Cash and Investments

Completing and Reporting on the Audit

Filters

Exam 7: Understanding and Testing the Clients System of Internal Controls

Which assertion is not specifically addressed by internal control objectives?

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

Benchmarking is

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

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

Susan Struthers will be reviewing those controls that stop fraud or errors from occurring. This is an example of a review of

If tests of controls indicate that internal controls are not as effective as originally assessed, the auditor will

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

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

Which of the following statements about internal control is incorrect?

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.

Flowcharts involve

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

Benchmarking is appropriate when

Audit risk is the risk that an entity's internal control system will not prevent or detect material misstatements.

CAS 230 Audit Documentation requires auditors to document each stage of the audit in their working papers. Regarding the contents of working papers, what are the specific requirements in CAS 230? Explain the importance of auditors effectively documenting the tests of controls they have performed.

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

The control environment does not

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

Explain the differences between preventive controls and detective controls.

Introduction and Review 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 Audit Performing Substantive Procedures

Auditing Sales and Receivables

Auditing Purchases, Payables and Payroll

Auditing Inventories and PPE

Auditing Cash and Investments

Completing and Reporting on the Audit

Filters