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Chapter 7 Test
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Fragen in diesem Quiz (53)
1All companies must follow the guidelines of AS5.
- ARichtig
- BFalsch
2Most public companies must follow the guidelines of AS5.
- ARichtig
- BFalsch
3In a public company, management must assess and report on internal control over financial reporting.
- ARichtig
- BFalsch
4In a public company, management's report on internal control must be signed by the members of the audit committee.
- ARichtig
- BFalsch
5Based on PCAOB guidelines, the audit of ICFR and financial statements audit should be conducted as an "integrated audit."
- ARichtig
- BFalsch
6The PCAOB makes it clear that the CEO and CFO are responsible for the internal control over financial reporting and the preparation of the statements.
- ARichtig
- BFalsch
7The likelihood of an event is "more than remote" when it is "highly possible."
- ARichtig
- BFalsch
8When auditing a public company, the auditor must form an opinion on the effectiveness of internal control over financial reporting, or issue a disclaimer in the event of a scope limitation.
- ARichtig
- BFalsch
9In order for an external auditor to complete an audit of a public company, the entity's management must comply with all of the following except:
- AAccept responsibility for the effectiveness of the entity's internal control over financial reporting.
- BEvaluate the effectiveness of the entity's internal control over financial reporting using suitable control criteria.
- CSupport its evaluation with sufficient evidence, including documentation.
- DPresent an oral assessment of the effectiveness of the entity's internal control over financial reporting as of the end of the entity's most recent fiscal year.
10An "integrated audit" as stated in Section 404 of the Sarbanes-Oxley Act means
- AThe auditor must consider the integrated thoughts and ideas of everyone on the audit staff.
- BThe auditor must conduct two audits, one on the effectiveness of internal control and one on the financial statements, in an integrated way.
- CThe auditor must integrate the same objectives whether auditing internal control or auditing the financial statements.
- DTwo independent CPA firms must work together on the audit.
11Section 404 of the Sarbanes-Oxley Act requires the auditor to provide which of the following?
- AReasonable assurance on the financial statements, absolute assurance on internal control.
- BReasonable assurance on internal control, absolute assurance on the financial statements.
- CAbsolute assurance on both the financial statements and internal control.
- DReasonable assurance on both the financial statements and internal control.
12According to the PCAOB, who is responsible for the reliability of the internal controls over financial reporting process of an entity?
- AThe entity's CEO and/or CFO.
- BThe entity's board of directors.
- CAn internal control specialist.
- DThe external auditor.
13The person in charge of authorizing credit to customers does not properly understand what constitutes a credit risk. This is an example of
- AA management deficiency.
- BA design deficiency.
- CA deficiency in operation.
- DThis is not an internal control deficiency.
14A deficiency that implies that there is a reasonable possibility of misstatement in the financial statements that is significant but not material is
- AA material weakness.
- BA significant deficiency.
- CAn insignificant deficiency.
- DA probable deficiency.
15Which of the following is not a topic that requires special consideration by management during management's internal control assessment process and by the auditor during the audit of internal control?
- AMultiple locations and business units.
- BService organizations.
- CThe role of the auditor in internal control.
- DSafeguarding assets.
16Management documentation should include all of the following except:
- ADocumentation regarding the auditor's evaluation of internal controls.
- BDocumentation regarding management's testing and evaluation of the controls.
- CDocumentation regarding the safeguarding of assets.
- DDocumentation on the controls designed in all five components of internal control.
17Which of the following is not a primary objective of internal control as established by COSO?
- AEfficiency and effectiveness of operations.
- BEffective purchasing systems.
- CCompliance with laws and regulations.
- DReliable financial reporting.
18The main goal of auditing internal control is
- ATo allow the auditor to fix any internal control deficiencies.
- BTo form an opinion on the ability of internal controls to prevent fraud.
- CTo assure management that internal control is preventing all material misstatements on the financial statements.
- DTo evaluate the effectiveness of controls over all relevant financial statement disclosures in the financial statements.
19An auditor performing an audit of internal control over financial reporting would be required to
- ARely on the work of internal auditors.
- BTest all of the entity's internal controls.
- CForm an opinion on the effectiveness of internal control.
- DRandomly identify accounts for an audit of internal control.
20In determining the extent to which the auditor may use the work of others in the audit of ICFR, the auditor should do all of the following except:
- ATest some of the work performed by others to evaluate the quality and effectiveness of their work.
- BEvaluate the nature of the controls subjected to the work of others.
- CEvaluate the competence and objectivity of the individuals who performed the work.
- DAll of these are required.
21Which of the following is least likely to represent a material weakness in internal control for Flynt Corporation?
- AFlynt Corporation's computer systems were not working properly for two days; consequently, employees needed to do all reconciliations manually.
- BFlynt Corporation's CFO was arrested last year for embezzling money from the entity.
- CFor the current year, the auditor found a material misstatement in Flynt's sales recognition that was undetected by the internal controls.
- DFlynt's audit committee is deemed to be ineffective.
22S&H Associates has just performed an audit of Bob's Bikes. S&H was unable to obtain a written representation from management about internal control. Which of the following is true?
- AS&H must still assume that management has assessed the effectiveness of internal control.
- BDepending on other factors in the audit, S&H can still issue an unqualified opinion.
- CS&H should consider this situation a limitation on the scope of the audit.
- DManagement does not need to give S&H a letter if it has disclosed all known internal control deficiencies.
23Public reporting on the effectiveness of internal control over financial reporting, as required by the Sarbanes-Oxley Act, includes
- AA statement that the public accounting firm that audited the financial statements has provided input on the design of internal controls.
- BA statement of management's responsibility for establishing and maintaining adequate internal control over financial reporting.
- CAn explicit statement as to whether management agrees with the public accounting firm's assessment of internal controls.
- DA detailed statement describing changes or additions to the internal control environment that occurred in the current year.
24Which of the following concerning the auditor's report on internal control over financial reporting is correct?
- AThe auditor's report contains an opinion on the effectiveness of internal control over financial reporting based on the auditor's independent work.
- BIn the report on internal control over financial reporting, the auditor can issue only a qualified or an unqualified opinion.
- CThe auditor needs to state management's assessment of internal control over financial reporting, but does not necessarily need to comment on whether he or she agrees.
- DAn unqualified opinion is required if a material weakness is identified.
25Prior to issuing a report on internal controls over financial reporting, an auditor is required to
- APerform procedures sufficient to identify all control deficiencies.
- BCommunicate to management, in writing, all control deficiencies previously included in written communication from the internal auditors.
- CCommunicate to management, in writing, all control deficiencies identified during the audit and inform the audit committee when such a communication has been made.
- DRepresent that no significant deficiencies were noted during the audit of internal control.
26Which of the following is not true?
- AThe auditor should not communicate with management until the audit of internal control over financial reporting is finished.
- BWritten communication between the auditor and management about internal control over financial reporting should include the definitions of control deficiencies, significant deficiencies, and material weaknesses.
- CThe auditor should not include in the audit report that no significant deficiencies were noted during an audit of internal control over financial reporting.
- DIf fraud is discovered, the auditor must report it to the appropriate level of management.
27An "integrated audit"
- AWill, in most cases, lead to a substantive audit strategy.
- BDenies the auditor access to information about the entity's controls.
- CMay be performed by two separate audit firms.
- DIs comprised of audits of internal control over financial reporting and of financial statements.
28The primary purpose of a generalized computer audit program is to allow the auditor to
- AUse the entity's employees to perform routine audit checks of the electronic data processing records that otherwise would be done by the auditor's staff accountants.
- BTest the logic of computer programs used in the entity's electronic data processing systems.
- CSelect larger samples from the entity's electronic data processing records than would otherwise be selected without the generalized program.
- DIndependently process electronic data processing records.
29Which of the following audit procedures would an auditor be least likely to perform using a generalized computer audit program?
- ASearching records of accounts receivable balances for credit balances.
- BInvestigating inventory balances for possible damaged goods.
- CSelecting accounts receivable for positive and negative confirmations.
- DListing of unusually large inventory balances.
30The auditor is least likely to use generalized audit software to
- APerform analytical procedures on the entity's data.
- BAccess information stored on the entity's IT files.
- CIdentify material weaknesses in the entity's IT controls.
- DTest the accuracy of the entity's computations.
31The five step process in the audit of ICFR includes
- AForm an opinion on the safeguarding of the entity's assets.
- BIdentify controls to test using a top-down, risk-based approach.
- CForm an opinion on the fairness of the presentation of the financial statements.
- DForm an opinion on the effectiveness of internal controls in meeting operational goals.
32Which of the following is an advantage of generalized computer audit packages?
- AThey are all written in one identical computer language.
- BThey can be used for audits of entities that use differing IT equipment and file formats.
- CThey have reduced the need for the auditor to study input controls for IT-related procedures.
- DTheir use can be substituted for a relatively large part of the required compliance testing.
33ACL is an example of
- AAn EDI software package.
- BAn IT software package.
- CSoftware that allows auditors to retrieve and evaluate data from entity systems.
- DA type of networking.
34The PCAOB's definition of internal control over financial reporting specifically mentions all of the following control activities except:
- AThe maintenance of asset records.
- BThe segregation of duties.
- CThe authorization by management of receipts and expenditures.
- DThe safeguarding of assets.
35Which of the following is not an element of management's assessment process for the effectiveness of internal control?
- AEvaluating the likelihood that failure of a control could result in a misstatement.
- BDetermining the locations and business units to include in the evaluation.
- CDetermining significant deficiencies and material weaknesses in controls.
- DObtaining the auditor's assessment of the internal control effectiveness.
36Which of the following is true regarding management's documentation of internal controls?
- ASome documentation should focus on controls designed to detect fraud.
- BDocumentation should focus on controls over the interim financial reporting process.
- CDocumentation must be done on paper.
- DInadequate documentation is usually considered an insignificant deficiency in internal control.
37Which of the following statements is false?
- AThe PCAOB focuses on the financial reporting objective of internal controls.
- BManagement is required to base internal controls on a recognized control framework.
- CMost U.S. companies use the internal control framework developed by COSO.
- DAll controls relevant to financial reporting are accounting controls.
38To obtain an understanding of significant processes and relevant subprocesses, auditors would be least likely to use which of the following techniques?
- AReviewing management documentation.
- BInquiry.
- CScanning.
- DTransaction walkthroughs.
39Management's written representations concerning internal control are
- AAddressed to the users of the financial statements.
- BNormally drafted by management.
- CIncluded in the auditor's final report.
- DSigned by the CEO and CFO.
40In the context of an audit of internal controls, the auditor must document all of the following except:
- AThe extent to which he or she relied upon work performed by others.
- BThe auditor's understanding and evaluation of the design of each of the components of the entity's internal control over financial reporting.
- CTranscripts of the auditor's discussion with management concerning the points at which misstatements could occur.
- DThe evaluation of any deficiencies discovered that could result in a modification of the auditor's report.
41Examples of entity-level controls include
- AManagement's risk assessment process.
- BControls to monitor results of operations.
- CThe period-end financial reporting process.
- DAll of these are examples of entity-level controls.
42Which of the following statements included in management's assessment of the effectiveness of internal control over financial reporting would be considered acceptable for issuing an unqualified opinion?
- ANothing has come to management's attention to suggest that the entity's internal control is less than effective.
- BStatements suggesting only negative assurance.
- CA conclusion that the entity's internal control over financial reporting is effective when a material weakness exists at the end of the reporting period.
- DDisclosure of material weaknesses corrected during the period.
43A modification of the standard report is required for all of the following conditions except:
- AThere is a restriction on the scope of the engagement.
- BThere is other information contained in management's report on internal control.
- CManagement has concluded that internal controls are not effective.
- DA significant subsequent event has occurred since the date being reported on.
44AAA & Associates recently finished auditing LinktheEarth Corporation's internal control over financial reporting. AAA found a number of material weaknesses in the entity's internal control. LinktheEarth's management remediated all of the weaknesses that AAA found. However, the auditors did not have sufficient time to retest the controls. What report should AAA issue with regards to internal control over financial reporting at year-end?
- AUnqualified report.
- BAdverse report.
- CQualified report.
- DDisclaimer on opinion.
45According to the COSO definition of safeguarding of assets
- AControls over financial reporting are effective if they provide reasonable assurance that asset losses will not occur.
- BControls over financial reporting are effective if they provide reasonable assurance that losses are properly reflected in the financial statements.
- CControls over financial reporting are effective if they provide reasonable assurance that asset losses will not occur and that losses are properly reflected in the financial statements.
- DThere is no way to create controls that will provide reasonable assurance that asset losses will not occur.
46An auditor will use the IT test data method in order to gain certain assurances with respect to the
- AInput data.
- BMachine capacity.
- CProcedures contained within the program.
- DDegree of keypunching accuracy.
47Which of the following is true of generalized audit software packages?
- AThey can be used only in auditing online computer systems.
- BThey can be used on any computer without modification.
- CThey each have their own characteristics that the auditor must carefully consider before using in a given audit situation.
- DThey enable the auditor to perform all manual test procedures less expensively.
48The advantages of generalized audit software include all of the following except:
- AIt involves auditing while the data are being processed (real-time).
- BIt is easy to use.
- CThe time to develop the application is usually short.
- DAn entire population can be examined in some instances.
49Section 404 of the Sarbanes-Oxley Act includes which of the following?
- AA requirement that management of a publicly traded company issues an assessment of internal control that covers the entire year.
- BSpecific guidance on what constitutes adequate internal control.
- CA requirement that management of a publicly traded company accepts responsibility for establishing and maintaining adequate internal controls.
- DA requirement that management of a publicly traded company issues an assessment regarding the efficiency of internal control for the year.
50For which of the following internal controls would an auditor be least likely to perform tests of internal controls closer to the "as of" date?
- AWithdrawals from Federal Bank of more than $5 million must include a manager's signature.
- BAt the end of each day at Federal Bank, the total cash in the vault is reconciled with daily registers of deposits and withdrawals.
- CFederal Bank has just started establishing trusts for its customers and it has only set up ten such trusts. Before making an investment for a trust, bank employees must verify that the investment is in accordance with stated investment policies.
- DOn an annual basis, Federal Bank management performs credit checks on its loan customers before determining the value of loans it will not be able to collect on.
51Which of the following is false?
- ARegardless of the achieved level of control risk in connection with the audit of the financial statements, auditing standards require the auditor to perform some substantive procedures for all significant accounts and disclosures.
- BThe absence of misstatements in financial statements is considered convincing evidence that existing controls are effective.
- CThe audit of internal control is intended to draw conclusions about the effectiveness of internal control over financial reporting as of a specific date.
- DThe auditor is required by AS5 to evaluate the implications of the financial statement audit for the effectiveness of internal control over financial reporting.
52When testing a computerized accounting system, which of the following is false regarding the test data approach?
- AThe test data need to consist of only those valid and invalid conditions in which the auditor is interested.
- BOnly one transaction of each type needs be tested.
- CTest data are processed by the entity's computer programs under the auditor's control.
- DThe test data must consist of all possible valid and invalid conditions.
53When an auditor tests a computerized accounting system, which of the following is true of the test data approach?
- ATest data are processed by the entity's computer programs under the auditor's control.
- BTest data must consist of all possible valid and invalid conditions.
- CTesting a program at year end provides assurance that the entity's processing was accurate for the entire year.
- DSeveral transactions of each type must be tested.
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- Quiz am Chapter 7 Test, erstellt von Sarah Cloutier am 07/02/2019.
- Autor
- Sarah Cloutier
- Sprache
- English
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