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Auditing Chapter 3 Homework

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Auditing Chapter 3 Homework
Kayla Harbaugh
Quiz por Kayla Harbaugh, atualizado more than 1 year ago
Kayla Harbaugh
Criado por Kayla Harbaugh mais de 3 anos atrás
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Resumo de Recurso

Questão 1

Questão
What is the primary benefit of effective internal control in an organization?
Responda
  • Completing a successful audit for the entity.
  • Achieving certain organizational goals.
  • Obtaining profitability and financial strength.
  • Maximizing value for shareholders.

Questão 2

Questão
Internal control is a process designed to achieve objectives in which one of the following categories?
Responda
  • Reliability of financial reporting
  • Compliance with applicable laws
  • Operational effectiveness
  • All of the above

Questão 3

Questão
Which of the following is considered to be an entity-wide control?
Responda
  • Segregation of duties
  • Controls over management override
  • Adequately documented transaction trails
  • Authorization procedures for purchasing

Questão 4

Questão
Which of the following is not included as a component of an organization's internal control structure in the COSO framework?
Responda
  • Control activities
  • The control environment
  • Control risk
  • Risk assessment

Questão 5

Questão
Which of the following is considered to be a transaction control?
Responda
  • Controls to monitor other controls
  • Physical controls to safeguard assets
  • Centralized processing controls
  • Policies that address significant business control practices

Questão 6

Questão
Which of the following is not part of the control environment of an organization?
Responda
  • Management’s philosophy and operating style.
  • Organizational structure.
  • Organization’s commitment to ethical values.
  • All of the above are part of the control environment.

Questão 7

Questão
With whom does the tone of internal control typically originate?
Responda
  • Auditors
  • Employees
  • Stockholders
  • Management

Questão 8

Questão
Which of the following COSO components is the foundation for all other components of internal control?
Responda
  • Information and communication
  • Control risk assessment
  • Control environment
  • Monitoring

Questão 9

Questão
Which of the following is an example of a control environment deficiency?
Responda
  • A low level of control consciousness within the organization
  • An audit committee that does not have independent members
  • An audit committee that is not viewed as the client of the external auditor
  • All of the above

Questão 10

Questão
Which of the following is an example of a control environment deficiency?
Responda
  • A low level of control consciousness within the organization.
  • An audit committee that does not have independent members.
  • An audit committee that is not viewed as the client of the external auditor.
  • All of the above.

Questão 11

Questão
Which of the following is not part of the control environment?
Responda
  • Methods of assigning authority and responsibility.
  • Management philosophy and operating style.
  • Control activities
  • Personnel policies and practices.

Questão 12

Questão
Which of the following best describes the purpose of personnel policies and procedures?
Responda
  • Ensure the organization has employees that are properly trained and supervised.
  • Ensure the organization complies with federal and state laws in its hiring and retention decisions.
  • Ensure the organization performs all of the above.
  • Ensure the organization hires the right people.

Questão 13

Questão
Which of the following is a major component of an organization's internal control structure?
Responda
  • Major new financing
  • Telecommunication equipment
  • Risk assessment
  • The financial environment

Questão 14

Questão
Internal controls may be preventive or detective. Which of the following controls is preventive?
Responda
  • Preparing bank reconciliations
  • Using batch totals
  • Requiring two persons to open mail containing payments
  • Reconciling the accounts receivable subsidiary file with the control account.

Questão 15

Questão
Which of the following is an inherent limitation of internal controls?
Responda
  • Lack of auditor independence
  • Employee peer review
  • Separation of duties
  • Collusion

Questão 16

Questão
Requiring the mail clerk to prepare a listing of all checks received, with copies of the list going to the cashier and to accounting, is an example of which type of control?
Responda
  • Detective
  • Corrective
  • Preventive
  • Directive

Questão 17

Questão
Which of the following is an example of a physical control to safeguard assets?
Responda
  • Safety audits on the production line
  • Hiring only trustworthy cashiers
  • Separation of duties
  • Locks on warehouse doors

Questão 18

Questão
A control designed to ensure that no employee is paid for more than 80 hours of sick pay is an example of which type of control?
Responda
  • Entity-wide control
  • Input control
  • Output control
  • Processing control

Questão 19

Questão
Which one of the following is not a control activity implemented in most accounting systems?
Responda
  • Segregation of duties
  • Authorization procedures
  • All of these activities are normally implemented
  • Competent, trustworthy employees

Questão 20

Questão
A control designed to ensure that sales transactions are generated using the company’s most current prices would be considered to be which type of control?
Responda
  • An output control
  • A physical control
  • A processing control
  • An input control

Questão 21

Questão
Requiring two signatures on any check in excess of $10,000 is an example of which type of control?
Responda
  • Processing control
  • Input control
  • Preventive control
  • Detective control

Questão 22

Questão
A bank reconciliation is an example of which type of control?
Responda
  • An input control
  • An output control
  • A detective control
  • A preventive control

Questão 23

Questão
Security management practices that limit access to technologies is a function included in which COSO component of internal control structure?
Responda
  • Monitoring
  • Risk assessment
  • Control activities
  • Control environment

Questão 24

Questão
Which COSO component of internal control concerns the process of identifying, capturing, and exchanging information in a timely fashion to enable accomplishment of the organization’s objectives?
Responda
  • Control environment
  • Monitoring
  • Information and communication
  • Control activities

Questão 25

Questão
Which of the following groups is interested in an organization's control structure?
Responda
  • Board members
  • Lenders
  • Auditors
  • All of the above

Questão 26

Questão
The information and communication component of internal control includes which of the following?
Responda
  • The organization deploys control activities through policies that establish what is expected and in procedures that put policies into action.
  • The organization obtains or generates and uses relevant, quality information to support the functioning of other components of internal control.
  • The organization identifies and assesses changes that could significantly impact the system of internal control.
  • All of the above

Questão 27

Questão
Which of the following activities would be an example of an ongoing evaluation?
Responda
  • Automated review of all payments and transactions
  • Monthly bank statement reconciliations
  • Periodic review of employee expense reimbursements
  • All of the above

Questão 28

Questão
Which of the following is not part of management’s report on internal controls?
Responda
  • The framework used to evaluate internal control.
  • A statement indicating the extent of tests performed to assess controls.
  • An assessment of the effectiveness of the company's internal control.
  • A statement that management is responsible for internal control.

Questão 29

Questão
Which of the following best represents a walkthrough?
Responda
  • The auditor walks the production line to find inefficiencies in the inventory process and reports them to management.
  • The controller takes a sample of recorded write-offs to ensure they have been properly approved.
  • The controller reviews the bank reconciliation prepared by the accountant and its resulting journal entries.
  • The auditor traces three purchasing transactions from the purchase order to the financial statement for observation and understanding.

Questão 30

Questão
Which of the following is the most severe?
Responda
  • Significant deficiencies in internal control.
  • Operational deficiencies in internal control.
  • Each is equally severe because it could result in inaccuracies in financial reporting.
  • Material weaknesses in internal control.

Questão 31

Questão
In a financial statement audit, what is the external auditor’s primary concern?
Responda
  • Determining whether the internal controls promote efficiency.
  • Detecting all errors.
  • Determining the effectiveness of operations.
  • Determining whether the internal controls are effective.

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