• A treasurer inadvertently transposed two digits in the debit amount when entering a journal entry to record issuance of a new debt. Which of the following control procedures might best mitigate this threat?
• Check digit verification
• Validity check
• Prenumber journal vouchers
• Cross-footing balance check
• Management implements a control procedure to hold the purchasing manager responsible for the costs of scrap and rework. This is done to mitigate the threat of:
• Purchasing goods at inflated prices
• Preventing stockout or excess inventory
• Purchasing goods of inferior quality
• Purchasing goods from unauthorized suppliers
• Which of the following is an example of an input control?
• Having another person review the design of a business form
• Making sure that output is distributed to the proper people
• Recalculating an amount to ensure its accuracy
• Collecting accurate statistics of historical transactions while gathering data Monitoring the work of programmers
• Which of the following control procedures might best mitigate the threat of failure to bill customers?
• Periodic reconciliation of bank statement with records by someone not involved in cash receipts processing
• Prenumbering of all shipping documents and periodic reconciliation with invoices
• Data entry application controls
• Reconciliation of subsidiary accounts receivable ledger with general ledger

9. Which of the following control procedures might best mitigate the threat of incomplete or inaccurate customer orders?

a. Data transmission controls

b. Logical access controls

c. Data entry edit checks

d. Send monthly statements to customers

11. Which of the following is not a source of evidence for an external auditor?

a. Test of controls

b. Work performed by internal auditors who report to the audit committee of the board of directors

c. Substantive tests

d. Work performed by internal auditors who organizationally report to the controller

12. A human resources director, responsible for hiring employees, credited employees for hours not worked and then received a kickback of 50% of their extra compensation. He also added fictitious names to the payroll and cashed the paychecks. Which of the following sets of duties, if properly separated, will best mitigate the problem?

a. Authorization and custody

b. Recording and authorization

c. Custody and recording

d. Authentication and authorization

14. Which of the following best describes the purpose of matching all invoices to the corresponding receiving reports and purchase orders?

a. Prevent payment of fictitious invoices

b. Verify that items were ordered from vendors on the approved vendor list

c. Verify that the items received were placed in inventory

d. Prevent large disbursements for questionable reasons

17. Which of the following is not a potential exposure of the financial reporting system?

a. General ledger accounts

b. Unauthorized access to the check register

c. Unauthorized access to the general ledger

d. A defective audit trail