Exam 9: Introduction to Internal Control Systems

Freije Refrigeration Company has an inventory of raw materials and parts consisting of thousands of different items which are of small dollar value individually but significant in total.A fundamental control requirement of Freije's inventory system is that:

If the same employee is responsible for authorizing a business transaction and recording the transaction in the accounting records,this indicates a weakness in which element of a company's internal control system?

For a specific internal control to be effective,both the preventive and the detective aspect of the control must exist and be interrelated.

It is normally considered good organizational design to establish the internal audit function within the accounting subsystem.

A good audit trail is an important element within a company's internal control system.

Suppose a company established training programs that teach employees to perform their job functions more efficiently and effectively.This is an example of which type of control?

Both cash and credit customers are educated to expect a sales ticket.Tickets are serially numbered.All numbers are accounted for daily.

Risk assessment is an important component of an internal control system.

The 1992 COSO report identifies five components for an effective internal control system.These are:

A general rule that should be followed when developing control procedures for a company's assets is:

The separation of duties control does not completely eliminate the possibility of embezzlement by employees.

The control environment is a component of a company's internal control system that:

Which of the following factors best describes the "control environment" of a firm?

Control procedures that provide feedback to management regarding the achievement of operational efficiency and adherence to prescribed managerial policies are called:

COBIT extensively examines the internal control area.

Assume that a company designs and implements a control procedure whereby the accountant who is responsible for recording cash receipts transactions does not have access to the cash itself.This control procedure is an example of a:

A periodic review by internal auditors that stresses the evaluation of the efficiency and effectiveness of a department's procedures is called a (an):

Which of the following personnel policies would be the most useful in mitigating fraud or embezzlement?

The component of an internal control system that concerns itself with the way a company's management assigns authority and responsibility is called:

Three objectives of a company's internal control system should be safeguarding assets,checking the accuracy and reliability of accounting data,and promoting operational efficiency.A fourth objective of a company's internal control system should be: