1. Detection risk is the risk

a. that internal controls will not be followed.

b. that the business will naturally experience, regardless of internal controls.

c. that measures the effectiveness of a firm's internal controls.

d. that an internal audit will not uncover incidents where controls have not been followed.

2. Which one of the following types of audits would be most likely to focus on objectives related to the efficient use of resources?

a. Operational audit

b. Independent audit

c. Compliance audit

d. Information systems audit

3. Which of the following is a reason for independent checks?

a. To assess an employee and determine whether he or she is following control procedures

b. To detect and correct errors and misappropriation of assets

c. To ensure that mistakes can be corrected within the fiscal year they are made

d. To ensure that management appears compliant with external audit standards

4. Output controls provide assurance that processing is complete and accurate. Which of the following controls is not an output control?

a. Password protection of document

b. Error listing

c. Audit trail

d. Reasonableness check

5. The data entry staff of National Manufacturing Inc. has responsibility for converting all of the plants shipping information to computerized records. The information flow begins when the shipping department sends a copy of a shipping order to the data entry staff. A data entry operator scans the shipping order information onto a hand-held data storage device. Verification clerks then check the computerized record with the original shipping orders. When a given batch of files has been reviewed and corrected, as necessary, the information is uploaded to the companys mainframe system at the home office. The most effective way to visualize and understand this set of activities would be through the use of a

a. Document flowchart

b. Decision table

c. Gantt chart

d. Program flowchart