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Answer Key To Practice Examination in Governance, Business Ethics, Risk Management, and Internal Control

This document contains an answer key for a practice examination on governance, business ethics, risk management, and internal controls. It includes answers to 30 multiple choice or true/false questions on these topics. The answers cover issues such as the responsibilities of various roles like the chief audit executive and board of directors, definitions of concepts like agency problem and code of ethics, examples of controls over areas like check signing and receiving, and analyses of issues like segregation of duties and trends in financial data.

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Alyssa Kyle
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262 views1 page

Answer Key To Practice Examination in Governance, Business Ethics, Risk Management, and Internal Control

This document contains an answer key for a practice examination on governance, business ethics, risk management, and internal controls. It includes answers to 30 multiple choice or true/false questions on these topics. The answers cover issues such as the responsibilities of various roles like the chief audit executive and board of directors, definitions of concepts like agency problem and code of ethics, examples of controls over areas like check signing and receiving, and analyses of issues like segregation of duties and trends in financial data.

Uploaded by

Alyssa Kyle
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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ANSWER KEY TO PRACTICE EXAMINATION IN GOVERNANCE, BUSINESS ETHICS,

RISK MANAGEMENT, AND INTERNAL CONTROL

1. To increase organizational value


2. The chief audit executive should report to the chief executive officer but have access to
the board of directors
3. During an engagement, an internal auditor learned that the organization was about to
introduce a new product that would revolutionize the industry. Because of the probable
success of the new product, the product manager suggested that the internal auditor buy
an additional interest in the organization, which the internal auditor did.
4. Agency problem
5. Assessment of the governance process by an independent internal audit activity
6. The responsibilities of the president
7. Its provisions are discretionary
8. No, since the law makes directors of the corporation solidarily liable for gross negligence
and bad faith in the discharge of their duties.
9. Stockholders have no right to manage their corporation unless they are also directors or
officers.
10. A survey of the board of directors to determine their level of support for the organization’s
code of ethics.
11. expresses standards of individual behavior for members of the organization
12. the founder’s idea of what the work environment should be like
13. aims to achieve organizational objectives
14. False, False
15. Cannot be determined
16. Achievement of objectives; managing risks
17. Risk assessment is a judgmental process of assigning monetary amounts to the perceived
level of risk found in an activity being evaluated. These amounts allow a chief audit
executive to select the engagement clients most likely to result in identifiable savings.
18. Avoiding
19. Establishing and maintaining an organizational culture
20. Preventive
21. The treasurer has the authority to sign checks but gives the signature block to the
assistant treasurer to run the check-signing machine
22. Direct participation by the owner of the business in the record keeping activities of the
business.
23. Controls ensure that the organization’s objectives will be achieved
24. Write-offs of delinquent accounts
25. Prenumbered shipping documents
26. Check register file by purchase order, compute total amounts paid by purchase order,
compare total amounts paid with purchase order amounts, and investigate any
discrepancies between the total amounts paid and purchase order amounts.
27. Debit expenses; credit the asset
28. A trend analysis discloses (1) sales increases of 50% and (2) cost of goods sold increases
of 25%
29. Segregating the receiving function from the authorization of parts purchases.
30. Segregation of duties between the programmer and systems analyst

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