^{MC Questions:}

1. Which of the following statements about control activities is true?

a) Control activities are designed by the auditors to mitigate and reduce audit risk.

b) Control activities are not affected by alterations to the objectives of a business.

c) Control activities are designed to prevent and detect errors or irregularities in normal, frequently recurring transactions.

d) Control activities are designed with the objective of reducing annual audit fees.

2. Which of the following is an example of application controls over IT systems?

a) Ensuring access to data files is restricted to authorized users

b) Batch processing control

c) Segregation of duties

d) Ensuring data is not changed without proper authorization

3. An auditor has designed the following control test for payroll:

Inspect the human resources (HR) personnel data change forms and check whether they are approved by the operating area manager and the HR manager.

Ensure the HR personnel data change forms contain all the necessary fields when submitted for processing.

Inspect the HR monthly reports on processed changes to employees' permanent data to ensure these are signed by the HR manager.

Which of the following control activities and objectives are present in this situation?

a) Authorization and accuracy

b) Physical controls and cutoff

c) Authorization and completeness

d) Performance reviews and completeness

4. Which of the following statements regarding computer-assisted audit techniques (CAATs) is most likely true?

a) CAATs are usually used if the volume of transactions to be tested is low.

b) A disadvantage of using CAATs is the likelihood of increasing sampling risk.

c) CAATs assist in decreasing the extent of audit testing.

d) CAATs can be a cost-effective way of testing compared to manual procedures.

Audit and Assurance Week 3 Quiz

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5. In which of the following situations would an auditor most likely assess control risk as high?

a) Payroll supervisor hiring junior payroll employees

b) Payroll supervisor comparing time sheets with pay stubs

c) Payroll supervisor authorizing increases to the hourly rate for all employees

d) Payroll supervisor examining forms for new hires in the company