The document discusses internal controls and their purpose in organizations. It covers topics like the major components of an organization's internal control structure, the control environment, and testing of internal controls. It provides examples of internal control questions and answers to effectively test understanding of internal controls.
The document discusses internal controls and their purpose in organizations. It covers topics like the major components of an organization's internal control structure, the control environment, and testing of internal controls. It provides examples of internal control questions and answers to effectively test understanding of internal controls.
The document discusses internal controls and their purpose in organizations. It covers topics like the major components of an organization's internal control structure, the control environment, and testing of internal controls. It provides examples of internal control questions and answers to effectively test understanding of internal controls.
The document discusses internal controls and their purpose in organizations. It covers topics like the major components of an organization's internal control structure, the control environment, and testing of internal controls. It provides examples of internal control questions and answers to effectively test understanding of internal controls.
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What is the primary purpose of effective internal control in an organization?
a. Achievement of certain organizational goals.
b. Completion of a successful audit for the entity. c. Shareholder involvement in the company's success. d. Obtaining profitability and financial strength. status: correct (1.0) correct: a your answer: a feedback: Correct. Which of the following is not a major emphasis in the design of effective internal control? a. Assets are properly protected. 2
b. Duties are segregated.
c. Transactions are authorized.
d. Processes are efficient.
status: correct (1.0) correct: d your answer: d feedback: Correct. One of the major components of an organization's internal control structure includes: a. audit control risk. 3
b. the financial environment.
c. risk assessment.
d. telecommunication equipment. status: correct (1.0) correct: c your answer: c feedback: Correct. The control environment includes which of the following? a. Control activities. 4
b. Management philosophy and operating style.
c. Assessing activity level risks. d. Application level controls.
status: correct (1.0)
correct: b your answer: b feedback: Correct. The PCAOB requires auditors of public companies to perform: a. an audit on the effectiveness of internal control. 5
b. an audit of all related parties.
c. an agreed upon procedures engagement.
d. a review of 8-K filings.
status: correct (1.0) correct: a your answer: a feedback: Correct. Which one of the following will an audit of a company's internal control include? a. An engagement to perform internal audit procedures. 6
b. Implementation of key financial controls.
c. Concluding on the accuracy of the statements of cash flows.
d. Testing of management's risk assessment procedures.
status: correct (1.0) correct: d your answer: d feedback: Correct. The payroll department should be responsible for: a. authorization of new employees. 7
b. processing payroll transactions.
c. timekeeping.
d. signing payroll checks.
status: correct (1.0) correct: b your answer: b feedback: Correct.
Which of the following is an example of a type of control that may be tested?
a. Contingent liabilities are disclosed adequately. b. Property and equipment is classified as a long-term asset.
c. Purchase orders are signed by proper agents and management.
d. An undocumented review of the expense budgets. status: correct (1.0) correct: c your answer: c feedback: Correct. Which one of the following is considered adequate documentation in an internal control system? a. The accounting clerk initials the bank reconciliation. 9
b. The mailroom mails commissions checks.
c. Invoices are prepared without sequential numbering.
d. Fixed assets are assigned useful lives at random.
status: correct (1.0) correct: a your answer: a feedback: Correct. A material weakness in the design of the operation of controls discovered in an audit of internal controls results in: a. a management letter. 10
b. an unfavorable opinion. c. the firing of the auditors.
d. adjusting audit journal entries.
status: correct (1.0) correct: b your answer: b feedback: Correct.
