Exam 9: Introduction to Internal Control Systems

A company's control environment is unimportant when developing an internal control system.

Controls that specifically encourage operating efficiency are often called preventive controls.

An audit trail problem associated with computerized data processing is that certain financial data processed by the computer may never be seen by the company's management.

An ideal control is:

The Basel Committee published a framework for the evaluation of internal control systems in banking organizations.

Operational audits are performed by a company's internal audit staff.

The sales department bookkeeper has been crediting house?account sales to her brother-in?law,an outside salesman.Commissions are paid on outside sales but not on house-account sales.This might have been prevented by requiring that:

Preventive and corrective controls are established solely to discourage fraud and embezzlement by an organization's employees.

The separation of duties control would not be violated if a company's cashier was also responsible for recording cash transactions.

The purpose of ________________ is to identify organizational risks,analyze their potential in terms of costs and likelihood of occurrence,and install those controls whose projected benefits outweigh their costs.

_________________ describes the policies,plans,and procedures implemented by a firm to protect its assets.

The maintenance of backup copies of a company's important transaction and master files is an example of a:

A good internal control system will contribute towards detecting accidental errors made by employees.

The voucher system requires that invoices be compared with receiving reports and express bills before a voucher is prepared and approved for payment.

Control activities and monitoring are one and the same.

The duties of cashier and accounts?receivable bookkeeper should be separated.

Regarding the cost-benefit concept,which of the following statements is true?

Due to data errors occurring from time to time in processing the Albert Company's payroll,the company's management is considering the addition of a data validation control procedure that is projected to reduce the risk of these data errors from 13% to 2%.The cost of the payroll reprocessing is estimated to be $11,000.If the data validation control procedure is implemented,the cost of this procedure is expected to be $700 per pay period (employees are paid biweekly).Based on the above data,which of the following statements is true?

Which of the following frameworks is widely used by managers to organize and evaluate their corporate governance structure?

Which of the following statements is true?