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Audit Test 2

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Quiz sobre Audit Test 2, criado por taylordgarman em 27-03-2014.
taylordgarman
Quiz por taylordgarman, atualizado more than 1 year ago
taylordgarman
Criado por taylordgarman quase 11 anos atrás
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Resumo de Recurso

Questão 1

Questão
Directors, management, external auditors, and internal auditors all play important roles in creating proper control processes. Senior management is primarily responsible for
Responda
  • Establishing risk management and control processes
  • Reviewing the reliability and integrity of financial and operational information
  • Ensuring that external and internal auditors oversee the administration of risk management and control processes
  • Implementing and monitoring controls designed by the board of directors

Questão 2

Questão
In an audit of financial statements, and auditor's primary consideration regarding a control is whether it
Responda
  • Reflects management's philosophy and operating style
  • Affects management's financial statement assertions
  • Provides adequate safeguards over access to assets
  • Enhances management's decision-making processes

Questão 3

Questão
Internal control cannot be designed to provide reasonable assurance regarding the achievement of objectives converning
Responda
  • Reducing the cost of an external audit
  • Elimination of all fraud
  • Availability of reliable data for decision-making purposes and protection of important documents and records
  • Compliance with the Foreign Corrupt Practices Act of 1977

Questão 4

Questão
The primary reason to establish internal control is to
Responda
  • Safeguard the resources of the organization
  • Provide reasonable assurance that the objectives of the organization are achieved
  • Encourage compliance with organizational objectives
  • Ensure the accuracy, reliability, and timeliness of information

Questão 5

Questão
Effective internal control
Responda
  • Reduces the need for management to review exception reports on a day-to-day basis
  • Eliminates risk and potential loss to the organization
  • Cannot be circumvented by management
  • Is unaffected by changing circumstances and conditions encountered by the organization

Questão 6

Questão
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?
Responda
  • Responsibility for accounting and financial duties should be assigned to one responsible officer
  • Responsibility for the performance of each duty must be fixed
  • Responsibility for the accounting duties must be borne by the audit committee
  • Responsibility for accounting must be assigned only to bonded employees

Questão 7

Questão
The PCAOB's AS No. 5 states that internal controls may be preventive or detective. Which of the following controls is preventive?
Responda
  • Requiring two persons to open mail
  • Reconciling the accounts receivable subsidiary file with the control account
  • Using batch totals
  • Preparing bank reconciliations

Questão 8

Questão
Which of the following statements about internal control is true?
Responda
  • Properly maintained internal control reasonably ensures that collusion among employees cannot occur
  • The establishment and maintenance of internal controls are important responsibilities of the internal auditor
  • Exceptionally effective internal control is enough for the auditor to eliminate substantive procedures on a significant account balance
  • A limitation of internal control is that management makes judgments about the extent of controls it implements

Questão 9

Questão
Internal controls are designed to provide reasonable assurance that
Responda
  • 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
  • Management's plans have not been circumvented by worker collusion
  • The internal auditing department's guidance and oversight of management's performance is accomplished economically and efficiently
  • Management's planning, organizing, and directing processes are properly evaluated

Questão 10

Questão
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
Responda
  • Material weakness
  • Significant deficiency
  • Control deficiency
  • Critical deficiency

Questão 11

Questão
Which of the following most likely would not be considered an inherent limitation of the potential effectiveness of an entity's internal control?
Responda
  • Incompatible duties
  • Management override
  • Mistakes in judgement
  • Collusion among employees

Questão 12

Questão
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
Responda
  • The auditor's primary responsibility is the detection of fraud
  • The board of directors is active and independent
  • Effective segregation of duties may not be feasible
  • Management monitors internal control

Questão 13

Questão
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?
Responda
  • Conducting a weekly physical inventory
  • Placing security guards at every entrance 24 hours a day
  • Imprinting a controlled identification number on each tool
  • Having all dispositions approved by the vice president of sales

Questão 14

Questão
The organization chart is a graphic representation of the
Responda
  • Power structure
  • Communications channels
  • Locus of decision making
  • Formal authority structure

Questão 15

Questão
Which of the following best describe the interrelated components of internal control?
Responda
  • Organizational structure, management philosophy, and planning
  • Control environment; risk assessment process; control activities; the information system, including related business processes; and monitoring of controls
  • Risk assessment process, backup facilities, responsibility accounting, and natural laws
  • Assignment of authority and responsibility, management philosophy, and organizational structure

Questão 16

Questão
Control activities constitute one of the five components of internal control. Control activities do not encompass
Responda
  • Performance reviews
  • Reconciliations
  • Physical controls
  • An internal auditing function

Questão 17

Questão
Monitoring of controls is an important component of internal control. Which of the following items is not an example of monitoring?
Responda
  • Management regularly compares divisional performance with budgets for the division
  • Data processing management regularly generates exception reports for unusual transactions or volumes of transactions and follows up with investigation as to causes
  • Data processing management regularly reconciles batch control totals for items processed with batch controls for items submitted
  • Management has asked internal auditing to perform regular audits of the controls over cash processing

Questão 18

Questão
Control activities include physical controls over access to and use of assets and records. A departure from the purpose of such procedures is that
Responda
  • Access to the safe-deposit box requires two officers
  • Only storeroom personnel and line supervisors have access to the raw materials storeroom
  • The mail clerk compiles a list of the checks received in the incoming mail
  • Only salespersons and sales supervisors use sales department vehicles

Questão 19

Questão
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?
Responda
  • Segregation of duties
  • Hiring practices
  • Training programs
  • Performance evaluations

Questão 20

Questão
Proper segregation of duties reduces the opportunities for persons to be in positions to both
Responda
  • Journalize entries and prepare financial statements
  • Record cash receipts and cash disbursements
  • Establish internal control and authorize transactions
  • Perpetrate and conceal errors or fraud

Questão 21

Questão
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
Responda
  • The audit committee is active in overseeing the entity's financial reporting policies
  • External policies established by parties outside the entity affect its accounting practices
  • Management is dominated by one individual who is also a shareholder
  • Internal auditors have direct access to the board of directors and entity management

Questão 22

Questão
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
Responda
  • Cost-benefit relationship of internal control
  • Achievement of the objectives of internal control
  • Comparison of recorded accountability with assets
  • Timing of the tests to be performed

Questão 23

Questão
Transaction authorization within an organization may be specific transaction authorization is the
Responda
  • Setting of automatic reorder points for material or merchandise
  • Approval of a detailed construction budget for a warehouse
  • Establishment of requirements to be met in determining a customer's credit limits
  • Establishment of sales prices for products to be sold to any customer

Questão 24

Questão
A proper segregation of duties requires that an individual
Responda
  • Authorizing a transaction records it
  • Authorizing a transaction maintain custody of the asset that resulted from the transaction
  • Maintaining custody of an asset be entitled to access the accounting records for the asset
  • Recording a transaction not compare the accounting record of the asset with the asset itself

Questão 25

Questão
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
Responda
  • Management is closely involved in operations
  • The entity is involved in complex transactions
  • The entity is subject to legal or regulatory requirements also found in larger entities
  • Financial reporting objectives have been established

Questão 26

Questão
If internal control is properly designed, the same employee may be permitted to
Responda
  • Receive and deposit checks and also approve write-offs of customer accounts
  • Approve vouchers for payment and also sign checks
  • Reconcile the bank statements and also receive and deposit cash
  • Sign checks and also cancel supporting documents

Questão 27

Questão
The frequency of the comparison of recorded accountability with assets (for the purpose of safeguarding assets) should be determined by
Responda
  • The amount of assets independent of the cost of the comparison
  • The nature and amount of the asset and the cost of making the comparison
  • The cost of the comparison and whether the susceptibility to loss results from errors of fraud
  • The auditor in consultation with client management

Questão 28

Questão
Organizational charts are useful to an independent external auditor because they
Responda
  • Depict all lines of organizational communication
  • Provide a starting point for assessing the risk of material misstatement
  • Ensure the proper division of responsibilities
  • Are essential to effective internal control

Questão 29

Questão
Audit evidence concerning segregation of duties ordinarily is best obtained by
Responda
  • Performing tests of transactions that corroborate management's financial statement assertions
  • Observing the employees as they apply specific controls
  • Obtaining a flowchart of activities performed by available personnel
  • Developing audit objectives that reduce control risk

Questão 30

Questão
For which of the following transactions would the auditor ordinarily have the greatest difficulty in obtaining assurance that inernal control objectives are met?
Responda
  • Collection of interest and dividends by a retailer
  • Acquisition of production equipment by a manufacturer
  • Collection of contributions from the public by a not-for-profit organization
  • Collection of credit sales by a retailer

Questão 31

Questão
An independent auditor of financial statements might consider the procedures performed by the internal auditors because
Responda
  • They are employees whose work must be reviewed during substantive testing
  • They are employees whose work may affect the nature, timing, and extent of audit procedures
  • Their work affects the cost-benefit trade-off
  • Their degree of independence may be inferred from the nature of their work

Questão 32

Questão
Although substantive procedures may support the accuracy of underlying records, these tests frequently provide no affirmative evidence of segregation of duties because
Responda
  • Substantive procedures rarely guarantee the accuracy of the records if only a sample of the transactions has been tested
  • The records may be accurate even though they are maintained by a person who performs incompatible functions
  • 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
  • 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

Questão 33

Questão
As part of understanding internal control relevant to the audit of a nonissuer, an auditor does not need to
Responda
  • Consider factors that affect the risks of material misstatement
  • Determine whether controls have been implemented
  • Identify the risks of material misstatement
  • Obtain knowledge about the operating effectiveness of internal control

Questão 34

Questão
After obtaining an understanding of the entity and its environment, including its internal controls, the auditor assesses
Responda
  • The need to apply auditing standards
  • Detection risk to determine the acceptable level of inherent risk
  • Detection risk and inherent risk to determine the acceptable level of control risk
  • Control risk and inherent risk to determine the acceptable level of detection risk

Questão 35

Questão
The primary purpose of obtaining an understanding of the entity and its environment, including its internal control, is to provide an auditor with
Responda
  • Evidence to use in reducing detection risk
  • A frame of reference within which to plan the audit
  • A basis for modifying tests of controls
  • Information necessary to prepare flowcharts

Questão 36

Questão
The ultimate purpose of understanding internal control is to contribute to the auditor's evaluation of the risk that
Responda
  • Tests of controls may fail to identify controls relevant to assertions
  • Material misstatements may exist in the financial statements
  • Specified controls requiring segregation of duties may be circumvented by collusion
  • Entity policies may be overridden by senior management

Questão 37

Questão
A CPA's understanding of internal control in a financial statement audit of a nonissuer
Responda
  • Is usually more limited than that made in an examination of internal control integrated with an audit of financial statements
  • Is usually more extensive than that made in an examination of internal control integrated with an audit of financial statements
  • Will usually be identical to that made in an examination of internal control integrated with an audit of financial statements
  • Will usually result in a report on the effectiveness of internal control

Questão 38

Questão
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
Responda
  • Provide a basis for designing the nature, timing, and extent of further audit procedures
  • Assure that management's procedures to detect all fraud are properly functioning
  • Bring to the auditor's attention possible control deficiencies
  • Develop evidence to support the assessed risks of material misstatement

Questão 39

Questão
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?
Responda
  • A lack of control at a single user entry point might compromise the security of a single database
  • The auditor may find it necessary to have an expectation of the operating effectiveness of controls for certain relevant assertions
  • The auditor must possess all the information technology skills necessary to complete the engagement
  • Because of the inherent consistency of computer processing, the auditor may be able to reduce the extent of testing an automated control

Questão 40

Questão
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.
Responda
  • Replace substantive procedures
  • Determine whether the controls have been implemented
  • Determine the effectiveness of the control procedures
  • Detect fraud

Questão 41

Questão
When obtaining an understanding of an entity's internal control, an auditor should concentrate on the substance of controls rather than their form because
Responda
  • The controls may be operating effectively but may not be flow charted
  • Management may establish appropriate controls but not act on them
  • The controls may be so inappropriate that no reliance is contemplated by the auditor
  • Management may implement controls with costs in excess of benefits

Questão 42

Questão
In obtaining an understanding of a non-issuer's internal control in a financial statement audit, an auditor is not obligated to
Responda
  • Determine whether the controls have been implemented
  • Perform procedures to understand the design of controls
  • Document the understanding of the entity's internal control components
  • Search for significant deficiencies in the operation of internal control

Questão 43

Questão
Which of the following statements regarding auditor documentation of the client's internal control is true?
Responda
  • Documentation must include flowcharts
  • Documentation must include procedural write-ups
  • No documentation is necessary, although it is desirable
  • No one particular form of documentation is necessary, and the extent of documentation may vary

Questão 44

Questão
An auditor should obtain an understanding of an entity's information system, including
Responda
  • Safeguards used to limit access to computer facilities
  • Process used to prepare significant accounting estimates
  • Procedures used to assure the proper supervision of staff
  • Programs and controls intended to address the risks of fraud

Questão 45

Questão
The auditor's understanding of internal control is documented to substantiate
Responda
  • Conformity of the accounting records with the applicable reporting framework
  • Compliance with auditing standards
  • Adherence to procedures for economic, effective, and efficient management decision making
  • The fairness of the financial statement presentation

Questão 46

Questão
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?
Responda
  • Narrative memorandum
  • Procedures manual
  • Flowchart
  • Checklists

Questão 47

Questão
Which of the following statements indicates the wrong way to use an internal control questionnaire?
Responda
  • Clarifying all answers with written remarks and explanations
  • Filling out the questionnaire during an interview with the person who has responsibility for the area that is being audited
  • Constructing the questionnaire so that no response requires attention
  • Supplementing the completed questionnaire with a narrative description or flowchart

Questão 48

Questão
A well-designed internal control questionnaire should
Responda
  • Elicit "yes" or "no" responses rather than narrative responses and be organized by department
  • Be a sufficient source of data for assessment of control risk
  • Help evaluate the effectiveness of internal control
  • Be independent of the objectives of the audit

Questão 49

Questão
In gaining an understanding of an issuer's internal control, an auditor would do all the following except
Responda
  • Inspect company documents
  • Observe employees
  • Perform a walk through of the transaction process
  • Send external confirmations

Questão 50

Questão
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
Responda
  • A basic familiarity with the computer's operating system
  • A sufficient understanding of the entire computer system
  • An expertise in computer systems analysis
  • A background in programming procedures

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