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Exam 4: Internal Controls

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Question 1

Multiple Choice

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Using pre-numbered documents in an accounting information system is a way to ___ risk.

A) Avoid.
B) Share.
C) Accept.
D) Reduce.

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Question 2

Multiple Choice

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Which of the following is included in both COSO frameworks?

A) Objective setting.
B) Risk response.
C) Monitoring.
D) Reasonable assurance.

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C

Question 3

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Match each item with the most appropriate item.

The terms "preventive, detective and corrective" are most closely associated with which element of Internal Control? Integrated Framework?

A strong firewall eliminates the need for: (i) data encryption, (ii) virus protection.

According to Brown, strategic risks include:

Based on the four purposes of internal controls discussed in the text, which of the four pairs listed are the most similar based on those purposes?

The elements of COSO's internal control framework and examples of the elements are listed below. Match each example with the framework section that most clearly applies.

The text identified four basic purposes of internal control and several examples of specific controls. Which of the following demonstrates the strongest relationship between them?

Internal control definitions The text presented three definitions of internal control: COSO, New York State Office of the State Comptroller and Lander. For each item listed below, put an "X" in the appropriate column(s) to indicate which definition(s) is/are referenced. $\begin{array} { | l | l | l | l | l | } \hline & \text { COSO } & \text { New York } & \text { Lander } & \text { None } \\\hline \text { Achieve objectives } & & & & \\\hline \text { Elimination of error } & & & & \\\hline \text { Generally accepted accounting principles } & & & & \\\hline \text { Reasonable assurance } & & & & \\\hline \text { Reliability } & & & & \\\hline\end{array}$

According to Enterprise Risk Management: Integrated Framework, risk can be:

According to the COSO definition, internal controls should address which of the following areas: (i) effectiveness and efficiency of operations, (ii) reliability of financial reporting, (iii) compliance with applicable laws and regulations.

List and discuss five specific internal controls Ruby should recommend to Barb based on the process described above.

The text identified four basic purposes of internal control and several examples of specific controls. Which of the following demonstrates the strongest relationship between them?

According to the COSO definition, internal controls should provide:

When a customer is unable or unwilling to pay amounts due, an organization experiences ___ risk.

Which of the following best explains one of the four basic purposes of internal control?

The general objectives of internal control include all of the following except:

A foreign company wants to trade its capital stock in the United States. The company hires a consultant with expertise in SOX in response to which form of risk?

Cortez works for a large retailer that sells various kinds of linens (towels, sheets, blankets, pillow cases) . In completing a risk assessment for his organization, which of the following questions should he ask first?