Exam 10: Section 404 Audits of Internal Control and Control Risk

The internal control framework developed by COSO includes five so-called "components" of internal control. Discuss each of these five components.

An audit procedure that would most likely be used by an auditor in performing tests of control procedures in which the segregation of functions and that leaves no "audit" trail is:

Sarbanes-Oxley requires management to issue an internal control report that includes two specific items. Which of the following is one of these two requirements?

You are performing the audit of internal control for Clifton Company. Which of the following would represent a material weakness in internal control?

Which of management's assertions with respect to implementing internal controls is the auditor primarily concerned?

For most uses, flowcharts are superior to narratives as a method of communicating the characteristics of internal control.

Which of the following best describes the purpose of control activities?

Section 404 requires auditors to perform walkthroughs to assist in understanding internal control.

Which of the following activities would be least likely to strengthen a company's internal control?

Which of the following is not one of the subcomponents of the control environment?

Hanlon Corp. maintains a large internal audit staff that reports directly to the chief financial officer. Audit reports prepared by the internal auditors indicate that the system is functioning as it should and that the accounting records are reliable. An independent auditor will probably:

Which of the following is correct regarding management's documentation of internal controls?

The chart of accounts is a control and is closely related to the controls related to adequate documents and records.

Internal controls can never be regarded as completely effective. Even if company personnel could design an ideal system, its effectiveness depends on the:

If the results of tests of controls support the design and operations of controls as expected, the auditor uses ________ control risk as the preliminary assessment.

Which of the following is the correct definition of "control deficiency"?

Audit evidence concerning proper segregation of duties normally is best obtained by:

In an audit of a non-public company, the less control risk there is, the smaller the amount of planned substantive evidence that is required.

A control available in a small company, which may be necessitated because of lack of competent personnel, is:

Which of the following statements is most correct with respect to separation of duties?