Could you please answer these 20 multiple choice questions

1.If controls are tested by the auditor at the interim date, what is the auditor's responsibility at year end as it relates to control testing?

• auditor asks management to evaluate any changes in controls
• auditor updates the evaluation of controls from the time between the interim and year-end date
• all testing is repeated at year end to ensure there have been no changes
• no responsibility at year end since the testing has already been performed

2.Which of the following describes a potential benefit of communicating internal control weaknesses via a management letter? Select all that apply.

• guarantees future audits are more efficient and effective
• discharges the audit team's responsibilities
• ensures controls are improved
• aids the client in improving their controls
• can increase the quality of the client's financial reporting

3.Which of the following are preventive controls? (Several choices may be correct.)

• F. Have reconciling items posted each month.
• D. Stamp invoices as "paid."
• B. Perform bank reconciliations, and follow up on unexpected outstanding items.
• C. The computer performs a daily comparison of quantities shipped to quantities billed. If differences are revealed, a report is generated for review and follow-up by the billing supervisor.
• E. Perform quarterly reviews of credit balances in accounts receivable to determine their causes.
• H. Sequential pre-numbered receiving reports should be used. These should be blank, and as the receiver receives the goods, they should be counted and the form completed.
• G. The sales manager reviews daily shipments, total sales, and sales per unit shipped.
• A. Have someone in the accounts payable department review coding prior to posting.

4.If an auditor asks employees how year-end accruals are identified and recorded to ensure all liabilities and expenses are recorded in the correct fiscal period, the auditor is gathering evidence using the technique of

• observation.
• inquiry.
• re-performance.
• inspection.

5.When would it be more appropriate for an auditor to use a flowchart instead of a narrative to document their understanding of internal controls?

• straightforward control activities
• auditor has little experience with auditing
• small entity
• complex control system

6.If controls are in place to ensure that transactions are recorded in the correct accounting period, this satisfies which internal control objective?

• valued
• real
• timely
• posted

7.An auditor performs a control test that includes examining the approval signature and date on purchase requisitions. This control ensures only valid and authorized purchases are made. The company completes on average one purchase requisition a day. How many purchase requisitions should be examined for approval in order for the auditor to gain reasonable assurance that the control is effective?

• 3-10
• 15-20
• 12
• 25-40

8.If the tests of controls indicate certain controls are not as effective as the auditor originally believed, which of the following will result? Select all that apply.

• audit planning strategy adjusted
• increased number of control tests will be performed
• detection risk is increased
• control risk will be increased
• increased number of substantive procedures will be planned

9.An auditor tests controls over cash receipts at the interim audit and determines they are functioning effectively. During the year-end audit, the auditor examines cash receipts to ensure they have been recorded in the correct fiscal year and while performing this substantive test, learns that the controls over cash receipts are still effective and continue to function properly. The auditor

• will perform more tests of controls.
• may not need to perform additional tests of controls.
• will increase the amount of substantive testing.
• will change their control assessment.

10.If an auditor selects a sample of cash disbursements and examines the attached invoice to ensure the disbursement is real, they are gathering evidence using the technique of

• inquiry.
• inspection.
• re-performance.
• observation.

11.If inherent risk is high and controls are NOT operating effectively, what type of testing will be performed by the auditor?

• no more testing, the auditor will rely on the results of the control tests
• some substantive procedures
• extensive procedures focused on estimate errors
• overall analytical review

12.When would it be more appropriate for an auditor to use a narrative instead of a flowchart to document their understanding of internal controls?

• large entity
• simple control system
• entity with difficult accounting entries
• auditor has limited experience with auditing

13.Which of the following is an inherent limitation of internal control?

• A control within a software program being overridden or disabled.
• Human error that results in a breakdown in internal control.
• Collusion by two or more individuals to circumvent a control.
• all of the answers are correct.

14.Which of the following statements accurately describe the selection and design of internal controls? (Several choices may be correct.)

• A. If a control is performed more frequently, the more testing will need to be required in order for the auditor to be satisfied that the control is operating effectively.
• C. Only significant control exceptions are investigated by the auditors.
• B. Testing of controls are usually documented and carried out during the year-end audit.
• D. A control exception is an observed condition that provides evidence that the control being tested did not operate as intended.
• E. The auditor's prior-period experiences with the engagement and the past results of control testing do not impact the extent of control testing.
• F. Changes in an accounting system will decrease the extent of control testing required.

15.Millicent Vonareva was reviewing her IT General Controls program for her client visit. She noticed an item that she thought did not belong in her "Controls to prevent unauthorized access to data" section of the program. Which item did not belong there?

• Policies exist to ensure departing employees are denied access to software programs and databases.
• Data files and critical applications are regularly backed up in offsite locations.
• Program changes are subject to formal change management procedures.
• Procedures exist to protect against computer viruses.

16.A computer system does not allow a purchase invoice to be entered into the system twice. This control is part of the control objective that ensures transactions are

• real.
• classified.
• valued.

timely.

17.A sequence test is performed on the payroll information to ensure all employee numbers have been accounted for. What type of control is this?

• input control
• output control
• logical access control
• processing control

18.Which of the following does NOT describe a potential benefit of communicating internal control weaknesses via a management letter?

• aids the client in improving their controls
• can increase the quality of the client's financial reporting
• guarantees future audits are more efficient and effective
• discharges the audit team's responsibilities

19.When management reviews a computer-generated monthly variance report and follows up on significant variances, this is a(n)

• logical access control.
• application control.
• manual control.
• IT-dependent manual control.

20.Which of the following would be considered an adverse change in the overall control environment of an entity?

• purchase of significant assets
• loss of the CFO
• loss of entry-level employee
• addition of a new product line