The concept of internal control includes IT systems and manual systems

Group of answer choices

True

False

Flag question: Question 2Question 23 pts

The auditor must understand internal control before assessing inherent risk.

Group of answer choices

True

False

Flag question: Question 3Question 33 pts

The extent of an entity's use of IT can affect any of the components of internal control

Group of answer choices

True

False

Flag question: Question 4Question 43 pts

One of the risks associated with internal control from IT is potential loss of data.

Group of answer choices

True

False

Flag question: Question 5Question 53 pts

Internal control consists of six components

Group of answer choices

True

False

Flag question: Question 6Question 63 pts

Internal control includes monitoring of controls

Group of answer choices

True

False

Flag question: Question 7Question 73 pts

A reliance strategy is used when control risk has been set at high

Group of answer choices

True

False

Flag question: Question 8Question 83 pts

All companies must follow the guidelines of AS5

Group of answer choices

True

False

Flag question: Question 9Question 93 pts

Most public companies must follow the guidelines of AS5.

Group of answer choices

True

False

Flag question: Question 10Question 103 pts

In a public company, management must assess and report on internal control over financial reporting

Group of answer choices

True

False

Flag question: Question 11Question 113 pts

In a public company, management's report on internal control must be signed by the members of the audit committee

Group of answer choices

True

False

Flag question: Question 12Question 123 pts

A primary purpose of internal controls is to

Group of answer choices

Form a basis for evaluating employees

Meet objectives of maintaining reliable documents and records and accurate financial reporting

Avoid clerical errors.

Monitor production quality.

Flag question: Question 13Question 133 pts

Internal controls are not designed to provide reasonable assurance that

Group of answer choices

Amounts recorded for assets are compared with the actual existing assets at reasonable intervals

Transactions are executed in accordance with management's authorization

Embezzlement will be eliminated

Access to assets is permitted only in accordance with management's authorization.

Flag question: Question 14Question 143 pts

The basic concept of internal control that recognizes the cost of internal control should not exceed the benefits expected to be derived is known as

Group of answer choices

Management responsibility.

Reasonable assurance

Management by exception

Limited liability

Flag question: Question 15Question 153 pts

An auditor would most likely be concerned with internal control policies and procedures that provide reasonable assurance about the

Group of answer choices

Appropriate prices that the entity should charge for its products.

Entity's ability to accurately process and summarize financial data.

Methods of assigning production tasks to employees.

Efficiency of management's decision-making process.

Flag question: Question 16Question 163 pts

Management's attitude toward aggressive financial reporting and its emphasis on meeting projected profit goals most likely would significantly influence an entity's control environment when

Group of answer choices

External policies established by parties outside the entity affect its accounting practices

Management is dominated by one individual.

The audit committee is active in overseeing the entity's financial reporting policies.

Internal audit personnel have direct access to the board of directors and the entity's management.

Flag question: Question 17Question 173 pts

Management philosophy and operating style most likely would have a significant influence on an entity's control environment when

Group of answer choices

The audit committee actively oversees the financial reporting process.

The internal audit function reports directly to management.

Management is dominated by one individual

Accurate management job descriptions delineate specific duties.

Flag question: Question 18Question 183 pts

Which of the following is not a primary objective of internal control as established by COSO?

Group of answer choices

Compliance with laws and regulations

Effective purchasing systems

Reliable financial reporting

Efficiency and effectiveness of operations

Flag question: Question 19Question 193 pts

The main goal of auditing internal control is

Group of answer choices

To form an opinion on the ability of internal controls to prevent fraud.

To evaluate the effectiveness of controls over all relevant financial statement disclosures in the financial statements

To assure management that internal control is preventing all material misstatements on the financial statements.

To allow the auditor to fix any internal control deficiencies.

Flag question: Question 20Question 203 pts

An auditor performing an audit of internal control over financial reporting would be required to

Group of answer choices

Form an opinion on the effectiveness of internal control

Randomly identify accounts for an audit of internal control.

Rely on the work of internal auditors.

Test all of the entity's internal controls

Flag question: Question 21Question 2110 pts

A __________________exists when (1) a control necessary to meet the relevant control objective is missing or (2) an existing control is not properly designed so that, even if the control operates as designed, the control objective would not be met.

Flag question: Question 22Question 2210 pts

The program flowcharting symbol representing a decision is a_____________

Flag question: Question 23Question 2310 pts

One of the five components of internal control is _______________environment

Flag question: Question 24Question 2410 pts

A _________________exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis