Question 1

Which of the following statements is incorrect?

Accepted Answer

A)  The less frequently a control is performed, the more testing the auditor needs to perform to be satisfied the control is operating effectively. 
B)  When other controls related to a particular objective are also in place and are tested, the level of assurance that might be needed from any one control is not as high as if the auditor were relying solely on a single control. 
C)  The less frequently a control is performed, the less testing the auditor needs to perform to be satisfied the control is operating effectively. 
D)  The results of the tests in prior audits and the current audit to date affect the perception of risk. 
A)  The less frequently a control is performed, the more testing the auditor needs to perform to be satisfied the control is operating effectively. 
B)  When other controls related to a particular objective are also in place and are tested, the level of assurance that might be needed from any one control is not as high as if the auditor were relying solely on a single control. 
C)  The less frequently a control is performed, the less testing the auditor needs to perform to be satisfied the control is operating effectively. 
D)  The results of the tests in prior audits and the current audit to date affect the perception of risk.

Question 2

Which of the following statements relating to control activitiis 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 3

Performance reviews are control activitithat include:

Accepted Answer

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

Question 4

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

Accepted Answer

Internal controls are important to compa

Question 5

When MelisLee, a senior auditor, performed an audit of an electronics firm, she reviewed the control environment, performed a risk assessment, and reviewed the key business processand control activities. These activitiare part of:

Accepted Answer

A)  a review of entity-level controls. 
B)  a review of the internal control system. 
C)  establishing audit risk. 
D)  none of the above. 
A)  a review of entity-level controls. 
B)  a review of the internal control system. 
C)  establishing audit risk. 
D)  none of the above.

Question 6

Rina Glickstein is unsure about the best way to evaluate her audit staff. She decidto look at their professional characteristics such as their expertise, experience, knowledge and training. What best describwhat she is looking for?

Accepted Answer

A)  their independence 
B)  their professional judgment 
C)  their due care 
D)  none of the above 
A)  their independence 
B)  their professional judgment 
C)  their due care 
D)  none of the above

Question 7

Claudia Andreou was concerned when she reviewed the operations of her client and noticed that many of the employehad incompatible dutiover the recording of transactions and custody of assets. This best refers to which desired control?

Accepted Answer

A)  information processing controls 
B)  physical controls 
C)  authorization controls 
D)  segregation of incompatible duties 
A)  information processing controls 
B)  physical controls 
C)  authorization controls 
D)  segregation of incompatible duties

Question 8

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 9

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 10

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 11

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

Which of the following statements is incorrect?

Which of the following statements relating to control activitiis incorrect?

Performance reviews are control activitithat include:

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

When MelisLee, a senior auditor, performed an audit of an electronics firm, she reviewed the control environment, performed a risk assessment, and reviewed the key business processand control activities. These activitiare part of:

Rina Glickstein is unsure about the best way to evaluate her audit staff. She decidto look at their professional characteristics such as their expertise, experience, knowledge and training. What best describwhat she is looking for?

Claudia Andreou was concerned when she reviewed the operations of her client and noticed that many of the employehad incompatible dutiover the recording of transactions and custody of assets. This best refers to which desired control?

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

Which of the following statements is correct?

Benchmarking is:

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

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 Procedur

Auditing Saland Receivabl

Auditing Purchases, Payabland Payroll

Auditing Inventoriand PPE

Auditing Cash and Investments

Completing and Reporting on the Audit

Filters

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

Which of the following statements is incorrect?

Which of the following statements relating to control activitiis incorrect?

Performance reviews are control activitithat include:

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

When MelisLee, a senior auditor, performed an audit of an electronics firm, she reviewed the control environment, performed a risk assessment, and reviewed the key business processand control activities. These activitiare part of:

Rina Glickstein is unsure about the best way to evaluate her audit staff. She decidto look at their professional characteristics such as their expertise, experience, knowledge and training. What best describwhat she is looking for?

Claudia Andreou was concerned when she reviewed the operations of her client and noticed that many of the employehad incompatible dutiover the recording of transactions and custody of assets. This best refers to which desired control?

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

Which of the following statements is correct?

Benchmarking is:

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

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 Procedur

Auditing Saland Receivabl

Auditing Purchases, Payabland Payroll

Auditing Inventoriand PPE

Auditing Cash and Investments

Completing and Reporting on the Audit

Filters