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Auditing chapter 3 Pre Quiz
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1What are the components of internal control per COSO's Internal Control–Integrated Framework?
- AOrganizational structure, management philosophy, planning, risk assessment, and control activities.
- BRisk assessment, control structure, backup facilities, responsibility accounting, and natural laws.
- CLegal environment of the firm, management philosophy, organizational structure, control activities, and control assessment.
- DControl environment, risk assessment, control activities, information and communication, and monitoring.
2Which one of the following components of internal control over financial reporting sets the tone for the organization?
- AInformation and communication
- BControl environment
- CMonitoring
- DRisk assessment
3Which of the following statements is false regarding the risk assessment component of internal control?
- ARisk assessment includes assessing fraud risk
- BRisk assessment includes the identification and analysis of significant changes
- CEconomic changes would not be considered a risk that needs to be analyzed as part of the risk assessment process.
- DRisk assessment includes assessing internal and external sources of risk
4Which of the following is not part of management's fraud risk assessment process?
- AThe assessment considers ways the fraud could occur
- BThe assessment considers pressures that might lead to fraud in the financial statements
- CThe assessment considers the role of the external auditor in preventing fraud
- DFraud risk assessments serve as an important basis for determining the control activities needed to mitigate fraud risks
5Assume that an organization sells software. The sales contracts with the customers often have nonstandard terms that impact the timing of revenue recognition. Thus, there is a risk that revenue may be recorded inappropriately. To mitigate that risk, the organization has implemented a policy that requires all nonstandard contracts greater than $1 million to be reviewed on a timely basis by an experienced and competent revenue accountant for appropriate accounting, prior to the recording of revenue. Management tested this control and found several instances in which the control was not working. Management has classified this deficiency as a material weakness. Which of the following best describes the conclusion made by management?
- AThere is a reasonable possibility that a misstatement could occur
- BThere is more than a remote possibility that a misstatement could occur
- CThere is more than a remote possibility that a material misstatement could occur
- DThere is a reasonable possibility that a MATERIAL misstatement could occur
- EThe likelihood of misstatement is reasonably possible
6The purpose of internal control is to provide absolute assurance that an organization will achieve its objective of reliable financial reporting.
- ARichtig
- BFalsch
7Only organizations in high-risk industries face a risk that they will not achieve their objective of reliable financial reporting.
- ARichtig
- BFalsch
8An organization's accounting system is part of its information and communication component of internal control.
- ARichtig
- BFalsch
9As part of monitoring, an organization will select either ongoing evaluations or separate evaluations, but not both.
- ARichtig
- BFalsch
10The auditor needs to understand a client's internal controls in order to anticipate the types of material misstatements that may occur in the financial statements and then develop sufficient audit procedures to determine whether those misstatements exist in the financial statements.
- ARichtig
- BFalsch
Informationen
- Beschreibung
- Auditing chapter 3 Pre Quiz
- Autor
- Kayla Harbaugh
- Sprache
- English
- Aufrufe
- 57
- Schlagwörter
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