Kayla Harbaugh
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Auditing chapter 3 Pre Quiz

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Kayla Harbaugh
Erstellt von Kayla Harbaugh vor fast 4 Jahre
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Auditing chapter 3 Pre Quiz

Auditing chapter 3 Pre Quiz

Frage 1 von 10

1

What are the components of internal control per COSO's Internal Control–Integrated Framework?

Wähle eine der folgenden:

  • Organizational structure, management philosophy, planning, risk assessment, and control activities.

  • Risk assessment, control structure, backup facilities, responsibility accounting, and natural laws.

  • Legal environment of the firm, management philosophy, organizational structure, control activities, and control assessment.

  • Control environment, risk assessment, control activities, information and communication, and monitoring.

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Frage 2 von 10

1

Which one of the following components of internal control over financial reporting sets the tone for the organization?

Wähle eine der folgenden:

  • Information and communication

  • Control environment

  • Monitoring

  • Risk assessment

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Frage 3 von 10

1

Which of the following statements is false regarding the risk assessment component of internal control?

Wähle eine der folgenden:

  • Risk assessment includes assessing fraud risk

  • Risk assessment includes the identification and analysis of significant changes

  • Economic changes would not be considered a risk that needs to be analyzed as part of the risk assessment process.

  • Risk assessment includes assessing internal and external sources of risk

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Frage 4 von 10

1

Which of the following is not part of management's fraud risk assessment process?

Wähle eine der folgenden:

  • The assessment considers ways the fraud could occur

  • The assessment considers pressures that might lead to fraud in the financial statements

  • The assessment considers the role of the external auditor in preventing fraud

  • Fraud risk assessments serve as an important basis for determining the control activities needed to mitigate fraud risks

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Frage 5 von 10

1

Assume that an organization sells software. The sales contracts with the customers often have nonstandard terms that impact the timing of revenue recognition. Thus, there is a risk that revenue may be recorded inappropriately. To mitigate that risk, the organization has implemented a policy that requires all nonstandard contracts greater than $1 million to be reviewed on a timely basis by an experienced and competent revenue accountant for appropriate accounting, prior to the recording of revenue. Management tested this control and found several instances in which the control was not working. Management has classified this deficiency as a material weakness. Which of the following best describes the conclusion made by management?

Wähle eine der folgenden:

  • There is a reasonable possibility that a misstatement could occur

  • There is more than a remote possibility that a misstatement could occur

  • There is more than a remote possibility that a material misstatement could occur

  • There is a reasonable possibility that a MATERIAL misstatement could occur

  • The likelihood of misstatement is reasonably possible

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Frage 6 von 10

1

The purpose of internal control is to provide absolute assurance that an organization will achieve its objective of reliable financial reporting.

Wähle eins der folgenden:

  • WAHR
  • FALSCH

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Frage 7 von 10

1

Only organizations in high-risk industries face a risk that they will not achieve their objective of reliable financial reporting.

Wähle eins der folgenden:

  • WAHR
  • FALSCH

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Frage 8 von 10

1

An organization's accounting system is part of its information and communication component of internal control.

Wähle eins der folgenden:

  • WAHR
  • FALSCH

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Frage 9 von 10

1

As part of monitoring, an organization will select either ongoing evaluations or separate evaluations, but not both.

Wähle eins der folgenden:

  • WAHR
  • FALSCH

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Frage 10 von 10

1

The auditor needs to understand a client's internal controls in order to anticipate the types of material misstatements that may occur in the financial statements and then develop sufficient audit procedures to determine whether those misstatements exist in the financial statements.

Wähle eins der folgenden:

  • WAHR
  • FALSCH

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