Question 1

Closely related to direct supervision is the concept of ________ ________- the assignment of two individuals to perform the same work task in unison.

Accepted Answer

The answer of Closely related to direct supervision is the...

Question 2

The ________ budget is the budget for the entire organization.

Accepted Answer

The answer of The ________ budget is the budget for...

Question 3

The identification of unprocessed or retained items in files according to their date,usually the transaction date,is

Accepted Answer

A)  clearing. 
B)  aging. 
C)  periodic auditing. 
D)  summary processing.

Question 4

Listed below are several examples of internal control procedures.
Required: For the following internal control procedures,give the reason or objective of the control:
a.Checks are mailed by someone other than the person who prepares and signs a check.
b.The accounting department matches invoices received to receiving reports prior to recording the payable.
c.The cashier deposits cash and mails checks to vendors,but does not record any information in the accounting system.
d.The employee performing the bank reconciliation does not perform any cash handling or recording activities.

Accepted Answer

The answer of Listed below are several examples of internal...

Question 5

The ________ cycle involves events related to the acquisition and management of capital funds,including ________.

Accepted Answer

The answer of The ________ cycle involves events related to...

Question 6

For both public and privately held companies,the Sarbanes-Oxley Act of 2002 (SOA)imposes certain requirements and restrictions on management,auditors,and company audit committees.

Accepted Answer

A) True 
 B)False

Question 7

Control is established in the budgeting process by comparing the results of activity to the budget for each activity.

Accepted Answer

A) True 
 B)False

Question 8

All companies whose stock is traded on the New York Stock Exchange are required to have a(n)________ ________ composed of outside directors.

Accepted Answer

The answer of All companies whose stock is traded on...

Question 9

Fraud examination draws on the fields of ________,________,and ________.

Accepted Answer

The answer of Fraud examination draws on the fields of...

Question 10

A repetition of processing and an accompanying comparison of individual results for equality is called

Accepted Answer

A)  redundant processing. 
B)  matching. 
C)  run-to-run comparison. 
D)  readback.

Question 11

The third component of internal control is risk assessment.

Accepted Answer

A) True 
 B)False

Question 12

The identification and analysis of differences between the values contained in two substantially identical files or between a detail file and a control file is

Accepted Answer

A)  validity checking. 
B)  verification. 
C)  reconciliation. 
D)  clearing.

Question 13

A negative answer given to a question on an internal control questionnaire almost always indicates a weakness in an internal control process area.

Accepted Answer

A) True 
 B)False

Question 14

ISO 27002 is a widely accepted international standard for best practices in information security.

Accepted Answer

A) True 
 B)False

Question 15

The marking of a form or document to direct or restrict its further processing is called

Accepted Answer

A)  an endorsement. 
B)  a restriction. 
C)  blocking. 
D)  a cancellation.

Question 16

Which of the items below would not be considered a possible common exposure for a corporation?

Accepted Answer

A)  Excessive prices are paid for goods for use in the organization. 
B)  The corporation never was billed for a sale of merchandise shipped to a customer. 
C)  A flash flood destroys the merchandise contained in a warehouse. 
D)  Certain equipment was accidentally misplaced and not depreciated.

Question 17

Metaluna,Inc.,is a new software company that recently began operations in 2003.Metaluna's stock is publicly traded.Listed below are several statements made recently by the CEO and Chairman of the Board of Metaluna at a directors meeting.
Required: Please comment on each statement in light of the requirements imposed by the Sarbanes-Oxley Act (SOA)of 2002.
a."I would like our external auditors to have a major role in our financial systems design and implementation in the future.They seem like a good group of knowledgeable individuals who I believe can help us in this area."
b."As you know,our controller resigned from her position this week.I would like to see if someone from the auditing firm who worked on our most recent audit would be interested in coming 'on board' with us."
c."I am ready to approve a $20,000 company loan to our CIO to help him send his daughter to Stanford in the fall."
d."The audit committee has suggested that a new auditing firm be hired after completion of our current audit.I would like the board to make a resolution giving me sole discretion and authorization in this matter,since I believe I am better qualified to make such a decision."

Accepted Answer

The answer of Metaluna,Inc.,is a new software company that recently...

Question 18

The board of directors serves as an interface between the stockholders of an organization and its operating management.

Accepted Answer

A) True 
 B)False

Question 19

The Sarbanes-Oxley Act of 2002 (SOA)allows the purchase or sale of stock by officers and directors and other insiders during blackout periods.

Accepted Answer

A) True 
 B)False

Question 20

COSO's Guidance on Monitoring Internal Control Systems includes the following phases except

Accepted Answer

A)  establishing a foundation for monitoring. 
B)  designing and executing monitoring procedures that are based on risk. 
C)  developing the objectives for the level of risk that can be tolerated by management. 
D)  assessing and reporting the results.

Exam 4: Transaction Processing and the Internal Control Process

Closely related to direct supervision is the concept of - the assignment of two individuals to perform the same work task in unison.

The ________ budget is the budget for the entire organization.

The identification of unprocessed or retained items in files according to their date,usually the transaction date,is

The cycle involves events related to the acquisition and management of capital funds,including .

For both public and privately held companies,the Sarbanes-Oxley Act of 2002 (SOA)imposes certain requirements and restrictions on management,auditors,and company audit committees.

Control is established in the budgeting process by comparing the results of activity to the budget for each activity.

All companies whose stock is traded on the New York Stock Exchange are required to have a(n) composed of outside directors.

Fraud examination draws on the fields of ,,and .

A repetition of processing and an accompanying comparison of individual results for equality is called

The third component of internal control is risk assessment.

The identification and analysis of differences between the values contained in two substantially identical files or between a detail file and a control file is

A negative answer given to a question on an internal control questionnaire almost always indicates a weakness in an internal control process area.

ISO 27002 is a widely accepted international standard for best practices in information security.

The marking of a form or document to direct or restrict its further processing is called

Which of the items below would not be considered a possible common exposure for a corporation?

The board of directors serves as an interface between the stockholders of an organization and its operating management.

The Sarbanes-Oxley Act of 2002 (SOA)allows the purchase or sale of stock by officers and directors and other insiders during blackout periods.

COSO's Guidance on Monitoring Internal Control Systems includes the following phases except