Question 1

Which one of the following components of the system of internal controls sets the tone for the organization?

Accepted Answer

A)  control risk assessment
B)  control environment
C)  information and communication
D)  monitoring

Question 2

Testing internal control for effectiveness is done in every audit.

Accepted Answer

A) True 
 B)False

Question 3

In addition to controls being specific,they may be broad,such as policies regarding a code of ethics.

Accepted Answer

A) True 
 B)False

Question 4

One of the major components of an organization's internal control structure includes:

Accepted Answer

A)  major new financing.
B)  the financial environment.
C)  risk assessment.
D)  telecommunication equipment.

Question 5

Auditing standards require that the auditor exercise professional judgment and maintain professional skepticism throughout the planning and performance of the audit.

Accepted Answer

A) True 
 B)False

Question 6

Internal control objectives are designed to assist the organization in assuring which of the following:

Accepted Answer

A)  the organization has effective and efficient operations related to its overall strategy
B)  the activities of the organization are in compliance with applicable laws and regulations
C)  the assets of the organization are safeguarded from theft and fraud
D)  all of the above.

Question 7

Good control means that risks are identified and dealt with effectively.

Accepted Answer

A) True 
 B)False

Question 8

Investors do not place much value on the internal control of the companies in which they invest.

Accepted Answer

A) True 
 B)False

Question 9

A component of COSO's internal control system concerns the process of identifying,capturing,and exchanging information in a timely fashion to enable accomplishment of the organization's objective.This component is called

Accepted Answer

A)  control activities.
B)  information and communication.
C)  monitoring.
D)  control environment.

Question 10

Which one of the following is not a control activity implemented in most accounting systems?

Accepted Answer

A)  segregation of duties
B)  competent,trustworthy employees
C)  authorization procedures
D)  all of these activities are normally implemented.

Question 11

Control activities may be implemented at the organizational level and at the transactional level.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following best represents a walk-through?

Accepted Answer

A)  The controller reviews the bank reconciliation prepared by the accountant and its resulting journal entries.
B)  The auditor walks the production line to find inefficiencies in the inventory process and reports them to management.
C)  The controller takes a sample of write-offs to ensure they have been adequately documented and recorded.
D)  The auditor traces three purchasing transactions from the purchase order to the financial statement for observation and understanding.

Question 13

Virtually all major financial frauds from the past decade were associated with organizations that had weaknesses in the control environment

Accepted Answer

A) True 
 B)False

Question 14

A company's internal auditing practices should not be considered when assessing control risk.

Accepted Answer

A) True 
 B)False

Question 15

Which one of the following will an audit of a company's internal control include?

Accepted Answer

A)  Reliance on client's internal controls testing.
B)  Sampling of key controls and related testing.
C)  Concluding on the accuracy of income statement balances.
D)  Design of the internal control system by the auditor.

Question 16

One of the components of internal control,monitoring,refers to the process of identifying,capturing,and exchanging information in a timely fashion to enable accomplishment of the organization's objectives.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following is not a reason that the auditor must gain an understanding of the client's internal control system?

Accepted Answer

A)  to better understand the client,its risks,and how it manages those risks.
B)  to assess control risk and identify the types of financial statement misstatements that are most likely to occur.
C)  to plan direct tests of account balances to determine if misstatements have occurred.
D)  all are reasons why auditors must gain an understanding of the client's internal control system.

Question 18

Which of the following is not true of the concepts that are embodied in the COSO framework of internal control?

Accepted Answer

A)  Internal control relates to the organization's objectives.
B)  The six components of internal control are logically and operationally intertwined.
C)  Internal control applies across all activities of the organization.
D)  All of the above are important concepts

Question 19

Control is considered to be part of corporate governance.

Accepted Answer

A) True 
 B)False

Question 20

Relationship of the five internal control components
The five components of the COSO internal control system are conceptually and logically integrated.List the five components of the model and describe how they are integrated with each other in the internal control process.
Use the following format:

Accepted Answer

The answer of Relationship of the five internal control components
The...

Exam 5: Internal Control Over Financial Reporting

Virtually all major financial frauds from the past decade were associated with organizations that had weaknesses in the control environment

Correct AnswerverifiedShow Answer

Which of the following is not true of the concepts that are embodied in the COSO framework of internal control?

Correct AnswerverifiedShow Answer

Which one of the following will an audit of a company's internal control include?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Internal control objectives are designed to assist the organization in assuring which of the following:

Correct AnswerverifiedShow Answer

In addition to controls being specific,they may be broad,such as policies regarding a code of ethics.

Correct AnswerverifiedShow Answer

Investors do not place much value on the internal control of the companies in which they invest.

Correct AnswerverifiedShow Answer

Testing internal control for effectiveness is done in every audit.

Correct AnswerverifiedShow Answer

Control activities may be implemented at the organizational level and at the transactional level.

Correct AnswerverifiedShow Answer

Which one of the following components of the system of internal controls sets the tone for the organization?

Correct AnswerverifiedShow Answer

Control is considered to be part of corporate governance.

Correct AnswerverifiedShow Answer

One of the major components of an organization's internal control structure includes:

Correct AnswerverifiedShow Answer

Auditing standards require that the auditor exercise professional judgment and maintain professional skepticism throughout the planning and performance of the audit.

Correct AnswerverifiedShow Answer

Which of the following is not a reason that the auditor must gain an understanding of the client's internal control system?

Correct AnswerverifiedShow Answer

Which one of the following is not a control activity implemented in most accounting systems?

Correct AnswerverifiedShow Answer

A component of COSO's internal control system concerns the process of identifying,capturing,and exchanging information in a timely fashion to enable accomplishment of the organization's objective.This component is called

Correct AnswerverifiedShow Answer

Good control means that risks are identified and dealt with effectively.

Correct AnswerverifiedShow Answer

One of the components of internal control,monitoring,refers to the process of identifying,capturing,and exchanging information in a timely fashion to enable accomplishment of the organization's objectives.

Correct AnswerverifiedShow Answer

A company's internal auditing practices should not be considered when assessing control risk.

Correct AnswerverifiedShow Answer

Which of the following best represents a walk-through?

Correct AnswerverifiedShow Answer

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