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Internal Control and Audit Essentials
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1
Question
Must corporate management, including the CEO, certify their organization's internal controls over financial reporting monthly and annually?
Page 1
Answer
False
2
Question
Do both the SEC and PCAOB require management to use the COBIT framework for assessing internal control adequacy?
Page 1
Answer
False
3
Question
Do both the SEC and PCAOB require management to use the COSO framework for assessing internal control adequacy?
Page 1
Answer
False
4
Question
Does a qualified opinion on management's assessment of internal controls necessitate a qualified opinion on the financial statements?
Page 1
Answer
False
5
Question
Do the same internal control objectives apply to manual and computer-based information systems?
Page 1
Answer
True
6
Question
Is the external auditor responsible for establishing and maintaining the internal control system?
Page 1
Answer
False
7
Question
Is segregation of duties an example of an internal control procedure?
Page 1
Answer
True
8
Question
Are preventive controls passive techniques designed to reduce fraud?
Page 1
Answer
False
9
Question
Does the Sarbanes-Oxley Act require only that a firm keep good records?
Page 1
Answer
False
10
Question
Is a key modifying assumption in internal control that the system is management's responsibility?
Page 1
Answer
True
11
Question
Does Section 404 of SOX require corporate management to certify internal controls quarterly and annually?
Page 2
Answer
False
12
Question
Does Section 302 require management of public companies to assess and report on internal control effectiveness?
Page 2
Answer
False
13
Question
Do application controls address a wide range of exposures threatening all programs in the computer environment?
Page 2
Answer
False
14
Question
Is IT auditing a small part of most external and internal audits?
Page 2
Answer
False
15
Question
Is advisory services an emerging field beyond the auditor's traditional attestation?
Page 2
Answer
True
16
Question
Does an IT auditor express an opinion on the fairness of financial statements?
Page 2
Answer
False
17
Question
Is external auditing an independent appraisal function within an organization?
Page 2
Answer
False
18
Question
What does the concept of reasonable assurance suggest about internal controls?
Page 3
Answer
The cost of an internal control should be less than the benefit it provides.
19
Question
Which is not a limitation of the internal control system?
Page 3
Answer
The industry is inherently risky.
20
Question
What is the most cost-effective type of internal control?
Page 3
Answer
Preventive control.
21
Question
Which is a preventive control?
Page 3
Answer
Credit check before approving a sale on account.
22
Question
Is a well-designed purchase order a preventive control?
Page 4
Answer
Yes.
23
Question
Is a physical inventory count a detective control?
Page 3
Answer
Yes.
24
Question
Is a bank reconciliation uncovering a transposition error a detective control?
Page 3
Answer
Yes.
25
Question
Which is not an element of the internal control environment?
Page 4
Answer
Well-designed documents and records.
26
Question
Which suggests a weakness in the internal control environment?
Page 4
Answer
Performance evaluations every three years.
27
Question
Which indicates a strong internal control environment?
Page 4
Answer
Internal audit reports to audit committee.
28
Question
According to COSO, what does an effective accounting system NOT perform?
Page 4
Answer
Separates duties of data entry and report generation.
29
Question
What is the best reason to separate duties in a manual system?
Page 4
Answer
To prevent the record keeper from authorizing transactions.
30
Question
Which is not an internal control procedure?
Page 5
Answer
Management's operating style.