Auditing and internal control Test Bank
Auditing and Assurance Services by Alvin a Arens 15th Edition Test Bank Contact me here to download the test bank INSTANTLY!!! PRICE FOR THE TEST BANK, SOLUTION MANUAL AND BOOK PDF: Test Bank 20$ USD Solution Manual 20$ USD BooK... More Show Auditing and Assurance Services by Alvin a Arens 15th Edition Test Bank Contact me here to download the test bank INSTANTLY!!! PRICE FOR THE TEST BANK, SOLUTION MANUAL AND BOOK PDF: Test Bank 20$ USD Solution Manual 20$ USD BooK PDF 30$ USD T h i s i s a s a m p l e c h a p t e r Auditing and Assurance Services, 15e (Arens) Chapter 26 Internal and Governmental Financial Auditing and Operational Auditing Learning Objective 26-1 1) Internal Auditors are expected to add value to the organization through improved operational effectiveness. In addition, their responsibilities include all the following except: A) reviewing the reliability and integrity of information. B) ensuring compliance with the company's accounting policies. C) verifying accounting information for external users. D) ensuring compliance with applicable governmental regulations. Answer: C Terms: Internal auditors responsibilities Diff: Easy Objective: LO 26-1 AACSB: Reflective thinking skills 2) Less TEST BANKINTERNAL AUDITINGQUALITY CONTROL STANDARDSPART 11.The policies and procedures adopted by a firm to provide reasonable assurance that all auditsdone by the firm are being carried out in accordance with the Objective and General PrinciplesGoverning an Audit of Financial Statements.a.General controlsb.Internal controlsc.Peer reviewd.Quality controls 2.The main purpose of implementing quality control policies and procedures is: Get answer to your question and much more 3.A firm should establish and maintain a system of quality control to provide it with reasonableassurance that:I. The firm and its personnel comply with professional standards and applicable legal andregulatory requirements.II. Report issued by the firm or engagement partners are appropriate in the circumstances. Get answer to your question and much more Comprehensive practice exams for independent CIA 2022 exam review Wiley CIA 2022 Part 1 Test Bank: Essentials of Internal Auditing (1-year access) offers students 1 year of access to practice questions for the challenging first part of the Certified Internal Auditor 2022 exam. A wide array of multiple-choice questions, accompanied by expansive answer explanations, will help you review for each of the domains covered by the test, including:
You’ll get access to test bank questions that cover each of the domains of the CIA 2022 exam. Perfect for anyone preparing for the difficult CIA 2022 exam, this resource is also a must-have for early-career professionals seeking to brush up on the fundamentals.
Section 404 Audits of Internal Control and Control Risk 1) Which of the following is not one of the three primary objectives of effective internal control? D) assurance of elimination of business risk 2) The Public Company Accounting Oversight Board states that reasonable assurance allows a: B) remote likelihood that material misstatements will not be prevented or detected by internal control. 3) Which of the following is most correct regarding the requirements under Section 404 of the Sarbanes Oxley Act? A) The audits of internal control and the financial statements provide reasonable assurance as to misstatements. 4) Which of management's assertions with respect to implementing internal controls is the auditor primarily concerned? B) reliability of financial reporting 5) To issue a report on internal control over financial reporting for a public company, an auditor must: C) evaluate management's assessment process and independently assess the design and operating effectiveness of internal control. 6) A company frequently sells products at a price below inventory cost. Essential controls in the risk assessment process would include: A) adequate controls that address the risk of overstating inventory. 7) Internal controls are not designed to provide reasonable assurance that: A) all frauds will be detected. 9) The Sarbanes-Oxley Act of 2002 requires that public companies issue an internal control report. The primary emphasis by auditors when evaluating and testing internal control is on controls over classes of transactions rather than controls over account balances. 1) Which of the following is responsible for establishing a private company's internal control? 2) Two key concepts that underlie management's design and implementation of internal control are: C) inherent limitations and reasonable assurance. 3) The PCAOB places responsibility for the reliability of internal controls over the financial reporting process to: 4) Which of the following parties provides an assessment of the effectiveness of internal control over financial reporting for public companies? B) C) D) 5) An act of two or more employees to steal assets and cover their theft by misstating the accounting records would be referred to as: 6) Sarbanes-Oxley requires management to issue an internal control report that includes two specific items. Which of the following is one of these two requirements? A) A statement that management is responsible for establishing and maintaining an adequate internal control structure and procedures for financial reporting. 7) When management is evaluating the design of internal control, management evaluates whether the control can do which of the following? B) C) D) 8) When one material weakness is present at the end of the year, management of a public company must conclude that internal control over financial reporting is: 9) The auditors primary purpose in auditing the client's system of internal control over financial reporting is: B) to evaluate the effectiveness of the company's internal controls over all relevant assertions in the financial statements. 10) Management must disclose material weaknesses in internal control in its audit report: C) if the weakness exists at the end of the year. 11) In performing the audit of internal control over financial reporting the auditor emphasizes internal control over class of transactions because: A) the accuracy of accounting system outputs depends heavily on the accuracy of inputs and processing. 12) Internal controls can never be regarded as completely effective. Even if company personnel could design an ideal system, its effectiveness depends on the: D) competency and dependability of the people using it. 13) Even with the most effectively designed internal control, the auditor must obtain audit evidence, beyond testing the controls, for every: C) material financial statement account. 14) Of the following statements about internal controls, which one is least likely to be correct? D) Control procedures reasonably ensure that collusion among employees cannot occur. 15) The Sarbanes-Oxley Act requires: A) all public companies to issue reports on internal controls. 16) The financial statements may not correctly reflect accounting frameworks such as AAP or IFRS if the: A) controls affecting the reliability of financial reporting are inadequate. 17) The primary emphasis by auditors is on controls over: A) classes of transactions. 18) An auditor should consider two key issues when obtaining an understanding of a client's internal controls. These issues are: C) the design and implementation of the controls. 19) When a company designs and implements internal controls, cost of the controls is not a valid consideration. 1) Which of the following activities would be least likely to strengthen a company's internal control? B) maintaining insurance for fire and theft 2) Which of the following components of the control environment define the existing lines of responsibility and authority? A) Organizational Structure 3) Which of the following factors may increase risks to an organization? B) C) D) 4) Which of the following statements is most correct with respect to separation of duties? B) Employees who authorize transactions should not have custody of related assets. 5) Authorizations can be either general or specific. Which of the following is not an example of a general authorization? B) A sales manager's authorization for a sales return. 6) Which of the following is correct with respect to the design and use of business documents? D) Documents designed for external use must be prenumbered. 7) Which of the following best describes the purpose of control activities? C) the policies and procedures that help ensure that necessary actions are taken to address risks to the achievement of the entity's objectives 8) Which of the following deal with ongoing or periodic assessment of the quality of internal control by management? 9) Which of the following best describes an entity's accounting information and communication system? B) C) D)
10) An audit procedure that would most likely be used by an auditor in performing tests of control procedures in which the segregation of functions and that leaves no "audit" trail is: 11) Internal controls normally include procedures designed to provide reasonable assurance that: B) transactions are executed in accordance with management's authorization. 12) Which of the following is not one of the subcomponents of the control environment? C) adequate separation of duties 13) It is important for the CPA to consider the competence of the clients' personnel because their competence bears directly and importantly upon the: B) achievement of the objectives of internal control. 14) Proper segregation of functional responsibilities calls for separation of: B) authorization, recording, and custody. 15) Which of the following is correct regarding management's documentation of internal controls? C) documentation needs to have some focus on controls designed to detect fraud 16) Which of the following groups establishes and maintains the company's internal controls? 17) The independent auditor should acquire an understanding of the internal audit function as it relates to the independent auditor's study and evaluation of internal control because the: C) work performed by internal auditors may be a factor in determining the nature, timing, and extent of the independent auditor's procedures. 18) To promote operational efficiency, the internal audit department would ideally report to: 19) Hanlon Corp. maintains a large internal audit staff that reports directly to the chief financial officer. Audit reports prepared by the internal auditors indicate that the system is functioning as it should and that the accounting records are reliable. An independent auditor will probably: D) place limited reliance on the work performed by the internal audit staff. 20) External financial statement auditors must obtain evidence regarding what attributes of an internal audit (IA) department if the external auditors intend to rely on IA's work? 21) To obtain an understanding of an entity's control environment, an auditor should concentrate on the substance of management's policies and procedures rather than their form because: A) management may establish appropriate policies and procedures but not act on them. 30) As a client's information system becomes more complex, it is likely that an auditor will increase reliance on controls and decrease substantive tests to support a control risk assessment. 31) Adequate documents and records is a subcomponent of the control environment. 32) The chart of accounts is a control and is closely related to the controls related to adequate documents and records. 33) Auditing standards prohibit reliance on the work of internal auditors due to the lack of independence of the internal auditors. 34) If an auditor wishes to rely on the work of internal auditors (IA), the auditor must obtain satisfactory evidence related to the IA's competence, integrity, and objectivity. 1) When the auditor attempts to understand the operation of the accounting system by tracing a few transactions through the accounting system, the auditor is said to be: C) performing a walk-through. 2) The purpose of phase 3 in the "process for understanding internal control and assessing control risk" is to: A) design, perform and evaluate tests of controls. 3) Narratives, flowcharts, and internal control questionnaires are three common methods of: B) documenting the auditor's understanding of internal controls. 4) Audit evidence concerning proper segregation of duties normally is best obtained by: A) direct personal observation of the employee who applies control procedures. 5) Audit evidence regarding the separation of duties is normally best obtained by: C) observation of employees applying control activities. 6) Section 404 requires auditors to perform walkthroughs to assist in understanding internal control. 7) Procedures used to obtain an understanding of internal control are normally performed on fewer transactions than procedures used to test controls. 8) For most uses, flowcharts are superior to narratives as a method of communicating the characteristics of internal control. 9) When documenting their understanding of a client's internal controls, auditors are required to use narratives. 1) The person responsible for reconciling sales invoices to customer orders does not access to the company's master price list in order to correctly compute sales. This is an example of a(n): 2) You are performing the audit of internal control for Clifton Company. Which of the following would represent a material weakness in internal control? B) The company's CFO was indicted for embezzling from the company. 3) The employee in charge of authorizing credit to the company's customers does not fully understand the concept of credit risk. This lack of knowledge would constitute: A) a deficiency in operation of internal controls. 4) Section 404 requires auditors to evaluate the effectiveness of the audit committee's oversight of the company's: B) C) D) 5) Once auditors determine that entity level controls are designed and placed in the operation they: A) make a preliminary assessment for each transaction-related audit objective for each major type of transaction. 6) Which of the following is the correct definition of "control deficiency"? A) A control deficiency exists if the design or operation of controls does not permit company personnel to prevent or detect misstatements on a timely basis. 7) Which of the following deficiency exists if a necessary control is missing or not properly formulated? 8) To determine if significant internal control deficiencies are material weaknesses, they must be evaluated on their: B) C) D) 9) Significant deficiencies need to be communicated to the company's audit committee because: B) they represent significant design flaws in internal controls. 10) Before making the final assessment of internal control at the end of an integrated audit, the auditor must: B) C) D) 11) Significant deficiencies and material weaknesses in internal control of a public company must be reported in writing to which of the following? C) audit committee of the company's board of directors 12) Significant deficiencies are matters that come to an auditor's attention and should be communicated to an entity's audit committee because they represent: B) internal control deficiencies that could adversely affect a company's ability to initiate, record, process, or report external financial statements reliably. 13) How must significant deficiencies and material weaknesses be communicated to those charged with governance? C) Written communication is required. 14) When considering internal control, an auditor should be aware of the concept of reasonable assurance, which recognizes that the: D) concept allows for only a remote likelihood that material misstatements will not be prevented or detected on a timely basis. 15) When planning an audit, the auditor's assessed level of control risk is: C) a judgment issue, based on auditor knowledge. 16) When a compensating control exists, the absence of a key control: A) is no longer a concern because there is no longer a significant deficiency or material weakness. 21) The most important component of internal control is risk assessment. 1) If the results of tests of controls support the design and operations of controls as expected, the auditor uses ________ control risk as the preliminary assessment. 2) An auditor is likely to use four types of procedures to support the operating effectiveness of internal controls. Which of the following would generally NOT be used? D) inspect design documents 3) After considering a client's internal controls, an auditor has concluded that it is well designed and is functioning as intended. Under these circumstances the auditor would most likely: C) not increase the extent of predetermined substantive tests. 5) When internal controls are highly effective in processing accounting transactions, the extent of substantive tests should be reduced. 6) When internal controls over a given financial statement account are assessed as highly effective, the auditor need not obtain audit evidence for that account beyond testing the controls. 1) In performing an audit of internal control over financial reporting which of the following is the auditor required to do? B) Form an opinion on the effectiveness of internal for financial reporting. 2) The criterion that is most likely to be used as a framework in evaluating a company's internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act is the Enterprise Risk Management framework. 3) To issue an unqualified opinion on internal control over financial reporting, there must be no identified material weaknesses and no restrictions on the scope of the audit. 1) A control available in a small company, which may be necessitated because of lack of competent personnel, is: D) the owner-manager's direct involvement in the control process. 2) When auditing a private company, the auditor should obtain an understanding of internal control sufficient to: 3) In the audit of a private company, the auditor will test internal controls when control risk is initially assessed at: B) C) D) 4) The auditor's consideration of a private company's internal control is: 5) Which of the following may represent the biggest challenge smaller public companies face in implementing effective internal control? 6) Which of the following is most correct for audits of non-public companies? B) an audit of internal control is not required 8) If, when obtaining an understanding of control activities of a relatively small client, the auditor identified no control activities, the auditor would probably set a high assessment of control risk. 9) If, when obtaining an understanding of control activities of a relatively small client, the auditor identified no control activities, the auditor would probably reassess whether the client is auditable. 10) Auditors of private companies may rely on prior periods' tests of controls. 11) In an audit of a non-public company, the less control risk there is, the smaller the amount of planned substantive evidence that is required. 12) For proper internal control, there should be adequate separation of duties. However, the extent of separation of duties considered "adequate" does not depend on the size of the organization. 13) In an audit of a non-public company, the auditor's assessment of control risk and the extent of tests of controls are inversely related. 14) Smaller companies usually have less extensive internal controls than larger companies which result in more frauds being committed at small companies. What is test of controls internal audit?A test of internal controls is an evaluation of the existing controls, either as part of an official audit or in preparation for an audit, to see if the controls are in place and identify weaknesses.
What is bank control testing?Within the banking industry, compliance testing involves assessing compliance-related processes and/or controls that can determine whether the bank's compliance program is designed and operating appropriately. The compliance testing function includes activities focused on financial crime compliance (FCC) testing.
What are the 5 internal controls in auditing?There are five interrelated components of an internal control framework: control environment, risk assessment, control activities, information and communication, and monitoring.
What are the 3 types of audit tests?These are the five types of testing methods used during audits.. Inquiry.. Observation.. Examination or Inspection of Evidence.. Re-performance.. Computer Assisted Audit Technique (CAAT). |