According to COSO, which of the following is a compliance objective?

A.To maintain material price variances within published guidelines.

B.To maintain a safe level of carbon dioxide emissions during production.

C.To maintain accounting principles that conform to GAAP.

D.To maintain adequate staffing to keep overtime expense within budget.

Managerial control can be divided into feedforward, concurrent, and feedback controls. Which of the following is an example of a feedback control?

A.Variance analysis.

B.Forecasting inventory needs.

C.Budgeting.

D.Quality control training.

Which of the following describes a characteristic of a control matrix?

A.The data entered into an input field is compared to a table of valid values for that field.

B.Transactions are accumulated for processing.

C.More than one control may be needed to adequately address a single risk.

D.Track the number of records processed by the system.

Controls should be designed to ensure that

A.Managements planning, organizing, and directing processes are properly evaluated.

B.Managements plans have not been circumvented by worker collusion.

C.Operations are performed efficiently.

D.The internal audit activitys guidance and oversight of managements performance is accomplished economically and efficiently.

Controls provide assurance to management that desired actions will be accomplished when objectives are established in writing and

A.Policies and procedures for activities are set out in manuals for use by properly trained personnel.

B.Internal reviews as to the propriety and effectiveness of the objectives are undertaken on a periodic basis by the internal audit activity.

C.Standards are adopted, results are compared with the standards, and corrective actions are undertaken.

D.Are communicated to employees in writing and are updated by operating personnel as conditions change.

The procedure requiring preparation of a prelisting of incoming cash receipts, with copies of the prelist going to the cashier and to accounting, is an example of which type of control?

A.Detective.

B.Directive.

C.Preventive.

D.Corrective.

As part of a total quality control program, a firm not only inspects finished goods but also monitors product returns and customer complaints. Which type of control best describes these efforts?

A.Feedback control.

B.Inventory control.

C.Feedforward control.

D.Production control.

Internal auditors need to determine the extent to which management has established adequate control criteria. For this purpose, which of the following actions may be appropriate?

Determining whether objectives have been accomplished

Using managements adequate control criteria in their evaluation

Working with management to develop appropriate control evaluation criteria

A.1, 2, and 3.

B.1 and 2 only.

C.2 only.

D.1 only.

The COSO and CoCo control frameworks emphasize soft controls, for example,

A.Compliance with specific policies.

B.Monitoring activities.

C.Communication of ethical values.

D.Control activities.

Controls may be classified according to the function they are intended to perform, for example, as detective, preventive, or directive. Which of the following is a directive control?

A.Requiring all members of the internal audit activity to be CIAs.

B.Monthly bank statement reconciliations.

C.Recording every transaction on the day it occurs.

D.Dual signatures on all disbursements over a specific amount.

Which of the following best defines control?

A.Control is provided when cost-effective measures are taken to restrict deviations to a tolerable level.

B.Control accomplishes objectives and goals in an accurate, timely, and economical fashion.

C.Controls are statements of what the organization chooses to accomplish.

D.Control is the result of proper planning, organizing, and directing by management.

The internal audit activitys (IAAs) duties regarding internal control include

A.Promoting continuous improvement.

B.Ensuring compliance with the law.

C.Administering the system of controls.

D.Safeguarding assets.

Control activities constitute one of the five components of internal control described in the COSO model. Control activities do not encompass

A.Preventive controls.

B.Physical controls.

C.Segregation of duties.

D.Control revalidation.

A companys new time clock process requires hourly employees to select an identification number and then choose the clock-in or clock-out button. A video camera captures an image of the employee using the system. Which of the following exposures can the new system be expected to change the least?

A.Fraudulent reporting of employees own hours.

B.Errors in employees overtime computation.

C.Inaccurate accounting of employees hours.

D.Recording of other employees hours.

According to COSO, which of the following is the most effective method to transmit a message of ethical behavior throughout an organization?

A.Removing pressures to meet unrealistic targets, particularly for short-term results.

B.Specifying the competence levels for every job in an organization and translating those levels to requisite knowledge and skills.

C.Strengthening internal audits ability to deter and report improper behavior.

D.Demonstrating appropriate behavior by example.

Which of the following is an example of a detective control?

A.The manager is given a check log reconciliation at the close of each business day.

B.The accounting department has a procedure for voiding and issuing replacement checks.

C.Checks are pre-numbered and kept in a locked cabinet.

D.The staff accountant was warned about printing a check prior to receiving authorization.

A restaurant chain has over 680 restaurants. All food orders for each restaurant are required to be entered into an electronic device that records all food orders by food servers and transmits the order to the kitchen for preparation. All food servers are responsible for collecting cash for all their orders and must turn in cash at the end of their shift equal to the sales value of food ordered for their I.D. number. The manager then reconciles the cash received for the day with the computerized record of food orders generated. All differences are investigated immediately by the restaurant. Organizational headquarters has established monitoring controls to determine when an individual restaurant might not be recording all its revenue and transmitting the applicable cash to the corporate headquarters. Which one of the following is the best example of a monitoring control?

A.The restaurant manager reconciles the cash received with the food orders recorded on the computer.

B.All food orders must be entered on the computer, and segregation of duties is maintained between the food servers and the cooks.

C.Cash is transmitted to corporate headquarters on a daily basis.

D.Management prepares a detailed analysis of gross margin per store and investigates any store that shows a significantly lower gross margin.

One accountant is responsible for collecting cash receipts from the cashier, recording cash in the accounting system, and depositing cash in the organizations bank account. At which level is control lacking?

A.Entity-level management oversight controls.

B.Process-level controls.

C.Entity-level governance controls.

D.Transaction-level controls.

An internal auditor fails to discover an employee fraud during an assurance engagement. The nondiscovery is most likely to suggest a violation of the International Professional Practices Framework if it was the result of a

A.Determination that any possible fraud in the area would not involve a material amount.

B.Presumption that the internal controls in the area were adequate and effective.

C.Determination that the cost of extending procedures in the area would exceed the potential benefits.

D.Failure to perform a detailed review of all transactions in the area.

Inherent limitations in internal control must be considered in evaluating its effectiveness in preventing or detecting errors and fraud. Inherent limitations or the effects of them do not include

A.Simple error.

B.Faulty human judgment in decision making.

C.Incompatible functions performed by the same person.

D.The inability to provide more than reasonable assurance.