Risk and Procedures for Control MCQs

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One of the financial statement auditors major concerns is to ascertain whether internal control is designed to provide reasonable assurance that






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The primary responsibility for establishing and maintaining internal control rests with






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Internal controls are designed to provide reasonable assurance that






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Which of the following are considered control environment factors? Detection Risk Personnel Policies and Practices






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Basic to a proper control environment are the quality and integrity of personnel who must perform the prescribed procedures. Which is not a factor in ...






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A director of a corporation is best characterized as a(n)






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Seymore was recently invited to become a director of Buckley Industries, Inc. If Seymore accepts and becomes a director, he along with the other direc...






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A corporate director commits a breach of duty if






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Audit committees have been identified as a major factor in promoting the independence of both internal and external auditors. Which of the following i...






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The audit committee may serve several important purposes, some of which directly benefit the internal audit activity. The most significant benefit pro...






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Which of the following is an appropriate responsibility of an audit committee?






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To avoid creating conflict between the chief executive officer (CEO) and the audit committee, the chief audit executive (CAE) should






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Which of the following actions is an appropriate response by organizations wishing to improve the publics perception of their financial reporting?






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Which of the following is not an appropriate member of an audit committee?






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Which of the following audit committee activities is of the greatest benefit to the internal audit activity?






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Which of the following features of a large manufacturers organizational structure is a control weakness?






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The audit committee strengthens the control processes of an organization by






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An audit committee of the board of directors of an organization is being established. Which of the following is normally a responsibility of the commi...






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Corporate directors, management, external auditors, and internal auditors all play important roles in creating a proper control environment. Top manag...






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Certain management characteristics may heighten the auditors concern about the risk of material misstatements. The characteristic that is least likel...






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When management of the sales department has the opportunity to override the system of internal controls of the accounting department, a weakness exist...






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Risk assessment is a process






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Some account balances, such as those for pensions or leases, are the results of complex calculations. The susceptibility to material misstatements in ...






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Which of the following is not a component of internal control?






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A restaurant food chain has over 680 restaurants. All food orders for each restaurant are required to be input into an electronic device which records...






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Audit risk consists of inherent risk, control risk, and detection risk. Which of the following statements is true?






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Audit risk is a combination of three separate risks at the account-balance or class-of-transactions level. The first risk is inherent risk. The second...






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Audit risk is a combination of three separate risks at the account-balance or class-oftransactions level. The first risk is inherent risk. The second...






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There are three components of audit risk: inherent risk, control risk, and detection risk. Inherent risk is






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The basic concepts implicit in internal accounting controls include the following: ? The cost of the system should not exceed benefits expected to be ...






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Which one of the following options would be most effective in deterring the commission of fraud?






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The COSO model component of Risk Assessment focuses on






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The statement below that best illustrates the importance of personnel policies and procedures is that personnel policies and procedures






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Which one of the following statements about internal control risk is correct?






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Which one of the following statements is the best example of inherent risk?






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Which one of the following characteristics related to managements philosophy and operating style best indicates managements commitment to strong int...






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Proper segregation of duties reduces the opportunities for persons to be in positions to both






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A proper segregation of duties requires that an individual






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The frequency of the comparison of recorded accountability with assets (for the purpose of safeguarding assets) should be determined by






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Which of the following questions would be inappropriate on an internal control questionnaire concerning purchase transactions?






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When considering internal control over securities, the auditor is especially concerned about .






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In a retail cash sales environment, which of the following controls is often absent? .






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The procedure that would best discourage the resubmission of vendor invoices after they have been paid is






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Organizational independence in the processing of payroll is achieved by functional separations that are built into the system. Which one of the follo...






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An employee should not be able to visit the corporate safe-deposit box containing investment securities without being accompanied by another corporat...






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Which control is not appropriate for property, plant, and equipment?






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Internal control should follow certain basic principles to achieve its objectives. One of these principles is the segregation of functions. Which one ...






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If internal control is well designed, two tasks that should be performed by different persons are






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Which one of the following situations represents an internal control weakness in the payroll department?






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Which of the following activities represents both an appropriate personnel department function and a deterrent to payroll fraud?






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Which one of the following situations represents a strength of internal control for purchasing and accounts payable?






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A utility company with a large investment in repair vehicles would most likely implement which internal control to reduce the risk of vehicle theft or...






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To minimize the risk that agents in the purchasing department will use their positions for personal gain, the organization should






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Management can best strengthen internal control over the custody of inventory stored in an off-site warehouse by implementing






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Auditors document their understanding of internal control with questionnaires, flowcharts, and narrative descriptions. A questionnaire consists of a s...






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Control procedures include physical controls over access to and use of assets and records. A departure from the purpose of such procedures is that






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Which of the following controls could be used to detect bank deposits that are recorded but never made?






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When an organization has strong internal control, management can expect various benefits. The benefit least likely to occur is






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An adequate system of internal controls is most likely to detect a fraud perpetrated by a






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One payroll audit objective is to determine if there is proper segregation of duties. Which of the following activities is incompatible?






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Which one of the following would not be considered an internal control structure policy or procedure relevant to a financial statement audit?






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Appropriate control over obsolete materials requires that they be






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A company has computerized sales and cash receipts journals. The computer programs for these journals have been properly debugged. The auditor discove...






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An auditor noted that the accounts receivable department is separate from other accounting activities. Credit is approved by a separate credit departm...






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One control objective of the financing/treasury cycle is the proper authorization of company transactions dealing with debt and equity instruments. Wh...






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The cash receipts function should be separated from the related record keeping in an organization to






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In an audit of a purchasing department, which of the following ordinarily would be considered a risk factor?






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Management wishes to include in its internal controls over factory payroll a procedure to ensure that employees are paid only for work actually perfor...






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Which of the following credit approval procedures would be the basis for developing a deficiency finding for a wholesaler?






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A means of ensuring that payroll checks are drawn for properly authorized amounts is to






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An internal auditor noted that several shipments were not billed. To prevent recurrence of such nonbilling, the organization should






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Controls can be classified according to function they are intended to perform; for example, to discover the occurrence of an unwanted event (detective...






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An audit of the payroll function revealed several instances in which a payroll clerk had added fictitious employees to the payroll and deposited the c...






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An audit of the receiving function at the companys distribution center revealed inadequate control over receipts. Which of the following controls wou...






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The director of internal auditing at a large multinational firm is evaluating the draft of a new travel policy that requires preparation of a travel p...






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Which one of the following situations represents an internal control weakness in accounts receivable?






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Control risk is the risk that a material misstatement in an account will not be prevented or detected on a timely basis by the client’s internal con...






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One characteristic of an effective internal control structure is the proper segregation of duties. The combination of responsibilities that would not ...






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According to SAS 55 (AU 319), Consideration of Internal Control in a Financial Statement Audit, an entitys internal control structure (ICS) consists ...






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Auditors regularly evaluate controls. Which of the following best describes the concept of control as recognized by internal auditors?






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Which group has the primary responsibility for the establishment, implementation, and monitoring of adequate controls in the posting of accounts recei...






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A retailer of high-priced durable goods operates a catalog-ordering division that accepts customer orders by telephone. The retailer runs frequent pri...






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ABC is a major retailer with over 52 department stores. The marketing department is responsible for 1. Conducting marketing surveys 2. Recommending lo...






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ABC is a major retailer with over 52 department stores. The marketing department is responsible for 1. Conducting marketing surveys 2. Recommending lo...






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In an automated payroll processing environment, a department manager substituted the time card for a terminated employee with a time card for a fictit...






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Payroll systems should have elaborate controls to prevent, detect, and correct errors and unauthorized tampering. The best set of controls for a payro...






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Accounting controls are concerned with the safeguarding of assets and the reliability of financial records. Consequently, these controls are designed ...






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The reporting of accounting information plays a central role in the regulation of business operations. The importance of sound internal control pract...






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The document that is used to record the actual work performed for a specific product by each factory employee is called a(n)






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If employee paychecks are distributed by hand to employees, which one of the following departments should be responsible for the safekeeping of uncla...






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The document that is the authorization to initiate the manufacture of goods is referred to as a






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Internal control cannot be designed to provide reasonable assurance regarding the achievement of objectives concerning






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Effective internal control






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A reason to establish internal control is to






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Internal controls may be preventive, detective, corrective, or directive. Which of the following is preventive?






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The internal auditor recognizes that certain limitations are inherent in any internal control system. Which one of the following scenarios is the resu...






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The treasurer makes disbursements by check and reconciles the monthly bank statements to accounting records. Which of the following best describes the...






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The procedure requiring preparation of a prelisting of incoming cash receipts, with copies of the prelist going to the cashier and to accounting, is a...






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A multinational corporation has an office in a foreign branch with a monetary transfer facility. Effective internal control requires that






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Which of the following describes the most effective preventive control to ensure proper handling of cash receipt transactions?