Deck 6: Internal Control Over Financial Reporting

Question 1

A strong component of internal control can reduce all the financial reporting risks to zero.

Answer 1

False

Question 2

Documentation should clearly identify each component of the internal control framework.

Answer 2

True

Question 3

Auditors gain an understanding of control risk for each relevant assertion for each important class of transactions and each significant account balance as a basis for planning the audit.

Answer 3

True

Question 4

Which one of the following groups is not interested in an organisation's control structure?

A) board members
B) lenders
C) auditors
D) environmental groups

Question 5

The components of internal control includes all of the following except:

A) management philosophy and operating style
B) methods of assigning authority and responsibility
C) personnel policies and practices
D) control activities

Question 6

Which of the following is not a component of the COSO framework for internal control?

A) risk assessment
B) control activities
C) monitoring
D) corporate governance

Question 7

The components of internal control includes which of the following?

A) control activities
B) management philosophy and operating style
C) assessing activity level risks
D) application level controls

Question 8

Computer controls that are pervasive and affect every computerised system are known as:

A) overall computer controls
B) general computer controls
C) application controls
D) processing controls

Question 9

Which of the following is part of the components of internal control of an organisation?

A) management's philosophy and operating style
B) organisational structure
C) human resources
D) all of the above

Question 10

Components of internal control
One of the elements of an organisation's control system is the 'components of internal control'. Identify at least four factors that the auditor should consider when reviewing the components of internal control and discuss how the auditor would relate this review to the assessment of control risk.

Question 11

Integrated audit
Discuss the fundamental control concepts an auditor should focus on when evaluating the organisation's data processing.