684727
Descripción
Test por taylordgarman, actualizado hace más de 1 año
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Creado por taylordgarman
hace más de 10 años
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Pregunta 1
Pregunta
Directors, management, external auditors, and internal auditors all play important roles in creating proper control processes. Senior management is primarily responsible for
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Establishing risk management and control processes
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Reviewing the reliability and integrity of financial and operational information
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Ensuring that external and internal auditors oversee the administration of risk management and control processes
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Implementing and monitoring controls designed by the board of directors
Pregunta 2
Pregunta
In an audit of financial statements, and auditor's primary consideration regarding a control is whether it
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Reflects management's philosophy and operating style
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Affects management's financial statement assertions
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Provides adequate safeguards over access to assets
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Enhances management's decision-making processes
Pregunta 3
Pregunta
Internal control cannot be designed to provide reasonable assurance regarding the achievement of objectives converning
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Reducing the cost of an external audit
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Elimination of all fraud
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Availability of reliable data for decision-making purposes and protection of important documents and records
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Compliance with the Foreign Corrupt Practices Act of 1977
Pregunta 4
Pregunta
The primary reason to establish internal control is to
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Safeguard the resources of the organization
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Provide reasonable assurance that the objectives of the organization are achieved
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Encourage compliance with organizational objectives
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Ensure the accuracy, reliability, and timeliness of information
Pregunta 5
Pregunta
Effective internal control
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Reduces the need for management to review exception reports on a day-to-day basis
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Eliminates risk and potential loss to the organization
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Cannot be circumvented by management
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Is unaffected by changing circumstances and conditions encountered by the organization
Pregunta 6
Pregunta
Internal control is a function of management, and effective control is based upon the concept of charge and discharge of responsibility and duty. Which of the following is one of the overriding principles of internal control?
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Responsibility for accounting and financial duties should be assigned to one responsible officer
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Responsibility for the performance of each duty must be fixed
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Responsibility for the accounting duties must be borne by the audit committee
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Responsibility for accounting must be assigned only to bonded employees
Pregunta 7
Pregunta
The PCAOB's AS No. 5 states that internal controls may be preventive or detective. Which of the following controls is preventive?
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Requiring two persons to open mail
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Reconciling the accounts receivable subsidiary file with the control account
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Using batch totals
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Preparing bank reconciliations
Pregunta 8
Pregunta
Which of the following statements about internal control is true?
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Properly maintained internal control reasonably ensures that collusion among employees cannot occur
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The establishment and maintenance of internal controls are important responsibilities of the internal auditor
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Exceptionally effective internal control is enough for the auditor to eliminate substantive procedures on a significant account balance
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A limitation of internal control is that management makes judgments about the extent of controls it implements
Pregunta 9
Pregunta
Internal controls are designed to provide reasonable assurance that
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Material errors or fraud will be prevented, or detected and corrected, within a timely period by employees in the course of performing their assigned duties
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Management's plans have not been circumvented by worker collusion
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The internal auditing department's guidance and oversight of management's performance is accomplished economically and efficiently
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Management's planning, organizing, and directing processes are properly evaluated
Pregunta 10
Pregunta
The design or operation of a control may not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. According to AU-C 265, this circumstance is a
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Material weakness
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Significant deficiency
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Control deficiency
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Critical deficiency
Pregunta 11
Pregunta
Which of the following most likely would not be considered an inherent limitation of the potential effectiveness of an entity's internal control?
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Incompatible duties
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Management override
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Mistakes in judgement
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Collusion among employees
Pregunta 12
Pregunta
Internal control can provide only reasonable assurance of achieving entity objectives. One factor limiting the likelihood of achieving those objectives in a small entity is that
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The auditor's primary responsibility is the detection of fraud
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The board of directors is active and independent
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Effective segregation of duties may not be feasible
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Management monitors internal control
Pregunta 13
Pregunta
An entity should consider the cost of a control in relationship to the risk. Which of the following controls best reflects this philosophy for a large dollar investment in heavy machine tools?
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Conducting a weekly physical inventory
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Placing security guards at every entrance 24 hours a day
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Imprinting a controlled identification number on each tool
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Having all dispositions approved by the vice president of sales
Pregunta 14
Pregunta
The organization chart is a graphic representation of the
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Power structure
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Communications channels
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Locus of decision making
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Formal authority structure
Pregunta 15
Pregunta
Which of the following best describe the interrelated components of internal control?
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Organizational structure, management philosophy, and planning
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Control environment; risk assessment process; control activities; the information system, including related business processes; and monitoring of controls
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Risk assessment process, backup facilities, responsibility accounting, and natural laws
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Assignment of authority and responsibility, management philosophy, and organizational structure
Pregunta 16
Pregunta
Control activities constitute one of the five components of internal control. Control activities do not encompass
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Performance reviews
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Reconciliations
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Physical controls
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An internal auditing function
Pregunta 17
Pregunta
Monitoring of controls is an important component of internal control. Which of the following items is not an example of monitoring?
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Management regularly compares divisional performance with budgets for the division
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Data processing management regularly generates exception reports for unusual transactions or volumes of transactions and follows up with investigation as to causes
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Data processing management regularly reconciles batch control totals for items processed with batch controls for items submitted
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Management has asked internal auditing to perform regular audits of the controls over cash processing
Pregunta 18
Pregunta
Control activities include physical controls over access to and use of assets and records. A departure from the purpose of such procedures is that
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Access to the safe-deposit box requires two officers
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Only storeroom personnel and line supervisors have access to the raw materials storeroom
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The mail clerk compiles a list of the checks received in the incoming mail
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Only salespersons and sales supervisors use sales department vehicles
Pregunta 19
Pregunta
Basic to a proper control environment are the quality and integrity of personnel who must perform the prescribed procedures. Which is not a factor in providing for competent personnel?
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Segregation of duties
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Hiring practices
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Training programs
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Performance evaluations
Pregunta 20
Pregunta
Proper segregation of duties reduces the opportunities for persons to be in positions to both
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Journalize entries and prepare financial statements
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Record cash receipts and cash disbursements
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Establish internal control and authorize transactions
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Perpetrate and conceal errors or fraud
Pregunta 21
Pregunta
Management's aggressive attitude toward financial reporting and its emphasis on meeting projected profit goals most liely would significantly influence an entity's control environment when
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The audit committee is active in overseeing the entity's financial reporting policies
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External policies established by parties outside the entity affect its accounting practices
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Management is dominated by one individual who is also a shareholder
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Internal auditors have direct access to the board of directors and entity management
Pregunta 22
Pregunta
It is important for the auditor to consider the competence of the audit client's employees because their competence bears directly and importantly upon the
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Cost-benefit relationship of internal control
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Achievement of the objectives of internal control
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Comparison of recorded accountability with assets
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Timing of the tests to be performed
Pregunta 23
Pregunta
Transaction authorization within an organization may be specific transaction authorization is the
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Setting of automatic reorder points for material or merchandise
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Approval of a detailed construction budget for a warehouse
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Establishment of requirements to be met in determining a customer's credit limits
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Establishment of sales prices for products to be sold to any customer
Pregunta 24
Pregunta
A proper segregation of duties requires that an individual
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Authorizing a transaction records it
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Authorizing a transaction maintain custody of the asset that resulted from the transaction
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Maintaining custody of an asset be entitled to access the accounting records for the asset
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Recording a transaction not compare the accounting record of the asset with the asset itself
Pregunta 25
Pregunta
A small private entity may use less formal means to ensure that internal control objectives are achieved. For example, extensive accounting procedures, sophisticated accounting records, or formal controls are least likely to be needed if
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Management is closely involved in operations
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The entity is involved in complex transactions
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The entity is subject to legal or regulatory requirements also found in larger entities
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Financial reporting objectives have been established
Pregunta 26
Pregunta
If internal control is properly designed, the same employee may be permitted to
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Receive and deposit checks and also approve write-offs of customer accounts
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Approve vouchers for payment and also sign checks
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Reconcile the bank statements and also receive and deposit cash
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Sign checks and also cancel supporting documents
Pregunta 27
Pregunta
The frequency of the comparison of recorded accountability with assets (for the purpose of safeguarding assets) should be determined by
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The amount of assets independent of the cost of the comparison
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The nature and amount of the asset and the cost of making the comparison
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The cost of the comparison and whether the susceptibility to loss results from errors of fraud
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The auditor in consultation with client management
Pregunta 28
Pregunta
Organizational charts are useful to an independent external auditor because they
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Depict all lines of organizational communication
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Provide a starting point for assessing the risk of material misstatement
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Ensure the proper division of responsibilities
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Are essential to effective internal control
Pregunta 29
Pregunta
Audit evidence concerning segregation of duties ordinarily is best obtained by
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Performing tests of transactions that corroborate management's financial statement assertions
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Observing the employees as they apply specific controls
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Obtaining a flowchart of activities performed by available personnel
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Developing audit objectives that reduce control risk
Pregunta 30
Pregunta
For which of the following transactions would the auditor ordinarily have the greatest difficulty in obtaining assurance that inernal control objectives are met?
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Collection of interest and dividends by a retailer
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Acquisition of production equipment by a manufacturer
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Collection of contributions from the public by a not-for-profit organization
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Collection of credit sales by a retailer
Pregunta 31
Pregunta
An independent auditor of financial statements might consider the procedures performed by the internal auditors because
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They are employees whose work must be reviewed during substantive testing
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They are employees whose work may affect the nature, timing, and extent of audit procedures
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Their work affects the cost-benefit trade-off
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Their degree of independence may be inferred from the nature of their work
Pregunta 32
Pregunta
Although substantive procedures may support the accuracy of underlying records, these tests frequently provide no affirmative evidence of segregation of duties because
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Substantive procedures rarely guarantee the accuracy of the records if only a sample of the transactions has been tested
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The records may be accurate even though they are maintained by a person who performs incompatible functions
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Substantive procedures relate to the entire period under audit, but tests of controls ordinarily are confined to the period during which the auditor is on the client's premises
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Many computerized procedures leave no audit trail of who performed them, so substantive procedures may necessarily by limited to inquires and observation of office personnel
Pregunta 33
Pregunta
As part of understanding internal control relevant to the audit of a nonissuer, an auditor does not need to
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Consider factors that affect the risks of material misstatement
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Determine whether controls have been implemented
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Identify the risks of material misstatement
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Obtain knowledge about the operating effectiveness of internal control
Pregunta 34
Pregunta
After obtaining an understanding of the entity and its environment, including its internal controls, the auditor assesses
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The need to apply auditing standards
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Detection risk to determine the acceptable level of inherent risk
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Detection risk and inherent risk to determine the acceptable level of control risk
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Control risk and inherent risk to determine the acceptable level of detection risk
Pregunta 35
Pregunta
The primary purpose of obtaining an understanding of the entity and its environment, including its internal control, is to provide an auditor with
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Evidence to use in reducing detection risk
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A frame of reference within which to plan the audit
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A basis for modifying tests of controls
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Information necessary to prepare flowcharts
Pregunta 36
Pregunta
The ultimate purpose of understanding internal control is to contribute to the auditor's evaluation of the risk that
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Tests of controls may fail to identify controls relevant to assertions
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Material misstatements may exist in the financial statements
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Specified controls requiring segregation of duties may be circumvented by collusion
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Entity policies may be overridden by senior management
Pregunta 37
Pregunta
A CPA's understanding of internal control in a financial statement audit of a nonissuer
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Is usually more limited than that made in an examination of internal control integrated with an audit of financial statements
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Is usually more extensive than that made in an examination of internal control integrated with an audit of financial statements
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Will usually be identical to that made in an examination of internal control integrated with an audit of financial statements
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Will usually result in a report on the effectiveness of internal control
Pregunta 38
Pregunta
A secondary result of the auditor's understanding of internal control in an audit of a nonissuer's financial statements is that the understanding may
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Provide a basis for designing the nature, timing, and extent of further audit procedures
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Assure that management's procedures to detect all fraud are properly functioning
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Bring to the auditor's attention possible control deficiencies
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Develop evidence to support the assessed risks of material misstatement
Pregunta 39
Pregunta
A financial statement auditor is considering internal control for a client with an information system that makes extensive use of information technology. Which of the following statements related to the understanding of internal control for this client is false?
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A lack of control at a single user entry point might compromise the security of a single database
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The auditor may find it necessary to have an expectation of the operating effectiveness of controls for certain relevant assertions
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The auditor must possess all the information technology skills necessary to complete the engagement
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Because of the inherent consistency of computer processing, the auditor may be able to reduce the extent of testing an automated control
Pregunta 40
Pregunta
In obtaining an understanding of internal control, the auditor may trace several transactions through the control process, including how the transactions interface with an service organizations whose services are part of the information system. The primary purpose of this task is to.
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Replace substantive procedures
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Determine whether the controls have been implemented
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Determine the effectiveness of the control procedures
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Detect fraud
Pregunta 41
Pregunta
When obtaining an understanding of an entity's internal control, an auditor should concentrate on the substance of controls rather than their form because
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The controls may be operating effectively but may not be flow charted
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Management may establish appropriate controls but not act on them
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The controls may be so inappropriate that no reliance is contemplated by the auditor
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Management may implement controls with costs in excess of benefits
Pregunta 42
Pregunta
In obtaining an understanding of a non-issuer's internal control in a financial statement audit, an auditor is not obligated to
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Determine whether the controls have been implemented
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Perform procedures to understand the design of controls
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Document the understanding of the entity's internal control components
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Search for significant deficiencies in the operation of internal control
Pregunta 43
Pregunta
Which of the following statements regarding auditor documentation of the client's internal control is true?
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Documentation must include flowcharts
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Documentation must include procedural write-ups
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No documentation is necessary, although it is desirable
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No one particular form of documentation is necessary, and the extent of documentation may vary
Pregunta 44
Pregunta
An auditor should obtain an understanding of an entity's information system, including
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Safeguards used to limit access to computer facilities
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Process used to prepare significant accounting estimates
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Procedures used to assure the proper supervision of staff
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Programs and controls intended to address the risks of fraud
Pregunta 45
Pregunta
The auditor's understanding of internal control is documented to substantiate
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Conformity of the accounting records with the applicable reporting framework
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Compliance with auditing standards
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Adherence to procedures for economic, effective, and efficient management decision making
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The fairness of the financial statement presentation
Pregunta 46
Pregunta
Which of the following is not a medium that can normally be used by an auditor to record information concerning a client's internal control?
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Narrative memorandum
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Procedures manual
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Flowchart
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Checklists
Pregunta 47
Pregunta
Which of the following statements indicates the wrong way to use an internal control questionnaire?
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Clarifying all answers with written remarks and explanations
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Filling out the questionnaire during an interview with the person who has responsibility for the area that is being audited
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Constructing the questionnaire so that no response requires attention
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Supplementing the completed questionnaire with a narrative description or flowchart
Pregunta 48
Pregunta
A well-designed internal control questionnaire should
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Elicit "yes" or "no" responses rather than narrative responses and be organized by department
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Be a sufficient source of data for assessment of control risk
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Help evaluate the effectiveness of internal control
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Be independent of the objectives of the audit
Pregunta 49
Pregunta
In gaining an understanding of an issuer's internal control, an auditor would do all the following except
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Inspect company documents
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Observe employees
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Perform a walk through of the transaction process
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Send external confirmations
Pregunta 50
Pregunta
Regardless of the nature of the client's information processing system, the auditor must consider internal control. In a computer environment, the auditor must, at a minimum, have
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A basic familiarity with the computer's operating system
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A sufficient understanding of the entire computer system
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An expertise in computer systems analysis
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A background in programming procedures
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