acc309 internal control and coso

96問 • 1年前

問題一覧

Which of the following is not one of the three primary objectives of effective internal control?

assurance of elimination of business risk

With which of management's assertions with respect to implementing internal controls is the auditor primarily concerned?

reliability of financial reporting

Internal controls

consist of policies and procedures designed to provide reasonable assurance that the company achieves its objectives and goals.

Internal controls are not designed to provide reasonable assurance that

all frauds will be detected.

Section 404 of the Sarbanes-Oxley Act requires that both private and public companies issue an internal control report.

FALSE

Management has a legal and professional responsibility to be sure that the financial statements are prepared in accordance with reporting requirements of applicable accounting frameworks.

TRUE

Who is responsible for establishing a private company's internal control?

senior management

Two key concepts that underlie management's design and implementation of internal control are

inherent limitations and reasonable assurance.

The PCAOB places responsibility for the reliability of internal controls over the financial reporting process on

management.

An act of two or more employees to steal assets and cover their theft by misstating the accounting records would be referred to as

collusion.

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 statement that management is responsible for establishing and maintaining an adequate internal control structure and procedures for financial reporting

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

ineffective.

The auditors primary purpose in auditing the client's system of internal control over financial reporting is

to evaluate the effectiveness of the company's internal controls over all relevant assertions in the financial statements.

The internal control framework used by most U.S. companies is the ________ framework.

COSO

In performing the audit of internal control over financial reporting, the auditor emphasizes internal control over classes of transactions because

the accuracy of accounting system outputs depends heavily on the accuracy of inputs and processing.

Internal controls can never be regarded as completely effective. Even if company personnel could design an ideal system, its effectiveness depends on the

competency and dependability of the people using it.

When considering internal controls,

auditors are concerned with the client's internal controls over the safeguarding of assets if they affect the financial statements.

Of the following statements about internal controls, which one is least likely to be correct?

Control procedures reasonably ensure that collusion among employees cannot occur.

The Sarbanes-Oxley Act requires

all public companies to issue reports on internal controls.

Which of the following is an accurate statement regarding the auditor's responsibility for understanding internal control?

Transaction-related audit objectives typically have no impact on the rights and obligations objectives.

The primary emphasis by auditors is on controls over

classes of transactions.

An auditor should consider two key issues when obtaining an understanding of a client's internal controls. These issues are

the design and operating effectiveness of the controls.

Reasonable assurance allows for

low likelihood that material misstatements will not be prevented or detected by internal controls.

Which of the following is most correct regarding the requirements under Section 404 of the Sarbanes-Oxley Act?

The audits of internal control and the financial statements provide reasonable assurance as to misstatements.

Under the Dodd-Frank federal financial reform legislation, all public companies are required to obtain an audit report on internal control over financial reporting.

FALSE

When a company designs and implements internal controls, cost of the controls is not a valid consideration.

FALSE

Which of the following activities would be least likely to strengthen a company's internal control?

maintaining insurance for fire and theft

Which of the following components of the control environment define the existing lines of responsibility and authority?

organizational structure

Which of the following statements is most correct with respect to separation of duties?

Employees who authorize transactions should not have custody of related assets.

Which of the following is correct with respect to the design and use of business documents?

Documents should be prenumbered consecutively to facilitate control over missing documents.

which of the following best describes the purpose of control activities?

the policies and procedures that help ensure that necessary actions are taken to address risks to the achievement of the entity's objectives

Which of the following deals with ongoing or periodic assessment of the quality of internal control by management?

monitoring activities

Which of the following is a risk assessment principle?

consider the potential for fraud

Which of the following is not an underlying principle related to risk assessment?

The auditors should determine how the company's risks should be managed.

Which of the following is not one of the subcomponents of the control environment?

adequate separation of duties

It is important for the CPA to consider the competence of the clients' personnel because their competence has a direct impact upon the

achievement of the objectives of internal control.

Proper segregation of functional responsibilities calls for separation of

authorization, recording, and custody.

Which of the following is an accurate statement regarding control activities?

all of the above

If a company has an effective internal audit department,

it can reduce external audit costs by providing direct assistance to the external auditors.

To promote operational efficiency, the internal audit department would ideally report to

the audit committee.

Hanlon Corp. maintains a large internal audit staff that reports directly to the accounting department. 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

place limited reliance on the work performed by the internal audit staff

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?

all of the above

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

management may establish appropriate policies and procedures but not act on them.

The ________ is helpful in preventing classification errors if it accurately describes which type of transaction should be in each account.

chart of accounts

Control activities are a subcomponent of the information and communication component of internal control.

FALSE

Adequate documents and records is a subcomponent of the control environment.

FALSE

The chart of accounts is helpful in preventing classification errors if it accurately describes which type of transaction should be in each account.

TRUE

Auditing standards prohibit reliance on the work of internal auditors due to the lack of independence of the internal auditors.

FALSE

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.

TRUE

An example of a specific authorization is management setting a policy authorizing the ordering of inventory when less than a one-week supply is on hand.

FALSE

Personnel responsible for performing internal verification procedures must be independent of those originally responsible for preparing the data.

TRUE

Old and new systems operating simultaneously in all locations is a test approach known as

parallel testing.

Which of the following is a component of general controls?

back-up and contingency planning

Which of the following statements related to application controls is correct?

Application controls relate to the processing of individual transactions.

General controls include all of the following except

processing controls.

Which of the following describes the process of implementing a new system in one part of the organization, while other locations continue to use the current system?

pilot testing

A ________ is responsible for controlling the use of computer programs, transaction files and other computer records and documentation and releases them to the operators only when authorized.

librarian

Security controls should require that users enter a(n) ________ before being allowed access to software and other related data files.

authorized password

Typical controls developed for manual systems which are still important in IT systems include

all of the above.

Which of the following controls prevent and detect errors while transaction data are processed?

processing

When purchasing software or developing in-house software,

a team of both IT and non-IT personnel should be involved in the decision process.

Output controls need to be designed for which of the following data integrity objectives?

detecting errors after the processing is completed

A control that relates to all parts of the IT system is called a(n)

general control.

Controls that are designed for each software application and are intended to help a company satisfy the transaction-related audit objectives are

application controls.

Which of the following is not an example of an applications control?

Back-up of data is made to a remote site for data security.

Which of the following is not a general control?

Computer performed validation tests of input accuracy.

Controls which are built in by the manufacturer to detect equipment failure are called

hardware controls.

Controls which are designed to assure that the information entered into the computer is authorized, complete, and accurate are called

input controls.

Which of the following tests determines that every field in a record has been completed?

completeness

An internal control deficiency occurs when computer personnel

originate changes in customer master files.

In an IT system, automated equipment controls or hardware controls are designed to

detect and control errors arising from the use of equipment.

If a control total were to be computed on each of the following data items, which would best be identified as a hash total for a payroll IT application?

employee numbers

Which of the following is not an application control?

logging in to the company's information systems via a password

Which of the following is not a general control?

processing controls

________ is the information technology and internal control processes an organization has in place to protect computers, networks, programs, and data from unauthorized access.

Cybersecurity

The most important output control is

review of data for reasonableness by someone who knows what the output should look like.

Parallel testing is used when old and new systems are operated simultaneously in all locations.

TRUE

Programmers should only be allowed to work with test copies of programs and data.

TRUE

Parallel testing can be used in combination with pilot testing to test new systems.

TRUE

The effectiveness of automated controls depends solely on the competence of the personnel performing the controls.

FALSE

Backup and contingency plans should also identify alternative hardware that can be used to process company data.

TRUE

A large portion of errors in IT systems result from data entry errors.

TRUE

Output controls focus on preventing errors during processing.

FALSE

Processing controls are a category of application controls.

TRUE

Controls that relate to a specific use of the IT system, such as the processing of sales or cash receipts, are called application controls.

TRUE

IT controls are classified as either input controls or output controls.

FALSE

A database management system

allows clients to create databases that include information that can be shared across multiple applications.

When auditing a client who uses a database management system, the auditor is principally aware of elevated risk due to the fact that

multiple users can access and update data files.

Firewalls are used to protect from

unauthorized external users.

Rather than maintain an internal IT center, many companies outsource their basic IT functions such as payroll to an

independent computer service center.

When the auditor is obtaining an understanding of the independent computer service center's internal controls, the auditor should

use the same criteria used to evaluate the client's internal controls.

________ protect(s) the security of electronic communication when information is transmitted and when it is stored.

Encryption

A(n) ________ is a computer resource deployment and procurement model that enables an organization to obtain IT resources and applications from any location via an Internet connection.

cloud computing environment

Firewalls can protect company data and software programs.

TRUE

LANs link equipment within a single or small cluster of buildings and are used within a company.

TRUE

Companies using e-commerce systems to transact business electronically do not need to be concerned about how their e-commerce partners manage IT systems risks.

FALSE

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問題一覧

Which of the following is not one of the three primary objectives of effective internal control?

assurance of elimination of business risk

With which of management's assertions with respect to implementing internal controls is the auditor primarily concerned?

reliability of financial reporting

Internal controls

consist of policies and procedures designed to provide reasonable assurance that the company achieves its objectives and goals.

Internal controls are not designed to provide reasonable assurance that

all frauds will be detected.

Section 404 of the Sarbanes-Oxley Act requires that both private and public companies issue an internal control report.

FALSE

Management has a legal and professional responsibility to be sure that the financial statements are prepared in accordance with reporting requirements of applicable accounting frameworks.

TRUE

Who is responsible for establishing a private company's internal control?

senior management

Two key concepts that underlie management's design and implementation of internal control are

inherent limitations and reasonable assurance.

The PCAOB places responsibility for the reliability of internal controls over the financial reporting process on

management.

An act of two or more employees to steal assets and cover their theft by misstating the accounting records would be referred to as

collusion.

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 statement that management is responsible for establishing and maintaining an adequate internal control structure and procedures for financial reporting

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

ineffective.

The auditors primary purpose in auditing the client's system of internal control over financial reporting is

to evaluate the effectiveness of the company's internal controls over all relevant assertions in the financial statements.

The internal control framework used by most U.S. companies is the ________ framework.

COSO

In performing the audit of internal control over financial reporting, the auditor emphasizes internal control over classes of transactions because

the accuracy of accounting system outputs depends heavily on the accuracy of inputs and processing.

Internal controls can never be regarded as completely effective. Even if company personnel could design an ideal system, its effectiveness depends on the

competency and dependability of the people using it.

When considering internal controls,

auditors are concerned with the client's internal controls over the safeguarding of assets if they affect the financial statements.

Of the following statements about internal controls, which one is least likely to be correct?

Control procedures reasonably ensure that collusion among employees cannot occur.

The Sarbanes-Oxley Act requires

all public companies to issue reports on internal controls.

Which of the following is an accurate statement regarding the auditor's responsibility for understanding internal control?

Transaction-related audit objectives typically have no impact on the rights and obligations objectives.

The primary emphasis by auditors is on controls over

classes of transactions.

An auditor should consider two key issues when obtaining an understanding of a client's internal controls. These issues are

the design and operating effectiveness of the controls.

Reasonable assurance allows for

low likelihood that material misstatements will not be prevented or detected by internal controls.

Which of the following is most correct regarding the requirements under Section 404 of the Sarbanes-Oxley Act?

The audits of internal control and the financial statements provide reasonable assurance as to misstatements.

Under the Dodd-Frank federal financial reform legislation, all public companies are required to obtain an audit report on internal control over financial reporting.

FALSE

When a company designs and implements internal controls, cost of the controls is not a valid consideration.

FALSE

Which of the following activities would be least likely to strengthen a company's internal control?

maintaining insurance for fire and theft

Which of the following components of the control environment define the existing lines of responsibility and authority?

organizational structure

Which of the following statements is most correct with respect to separation of duties?

Employees who authorize transactions should not have custody of related assets.

Which of the following is correct with respect to the design and use of business documents?

Documents should be prenumbered consecutively to facilitate control over missing documents.

which of the following best describes the purpose of control activities?

the policies and procedures that help ensure that necessary actions are taken to address risks to the achievement of the entity's objectives

Which of the following deals with ongoing or periodic assessment of the quality of internal control by management?

monitoring activities

Which of the following is a risk assessment principle?

consider the potential for fraud

Which of the following is not an underlying principle related to risk assessment?

The auditors should determine how the company's risks should be managed.

Which of the following is not one of the subcomponents of the control environment?

adequate separation of duties

It is important for the CPA to consider the competence of the clients' personnel because their competence has a direct impact upon the

achievement of the objectives of internal control.

Proper segregation of functional responsibilities calls for separation of

authorization, recording, and custody.

Which of the following is an accurate statement regarding control activities?

all of the above

If a company has an effective internal audit department,

it can reduce external audit costs by providing direct assistance to the external auditors.

To promote operational efficiency, the internal audit department would ideally report to

the audit committee.

place limited reliance on the work performed by the internal audit staff

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?

all of the above

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

management may establish appropriate policies and procedures but not act on them.

The ________ is helpful in preventing classification errors if it accurately describes which type of transaction should be in each account.

chart of accounts

Control activities are a subcomponent of the information and communication component of internal control.

FALSE

Adequate documents and records is a subcomponent of the control environment.

FALSE

The chart of accounts is helpful in preventing classification errors if it accurately describes which type of transaction should be in each account.

TRUE

Auditing standards prohibit reliance on the work of internal auditors due to the lack of independence of the internal auditors.

FALSE

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.

TRUE

An example of a specific authorization is management setting a policy authorizing the ordering of inventory when less than a one-week supply is on hand.

FALSE

Personnel responsible for performing internal verification procedures must be independent of those originally responsible for preparing the data.

TRUE

Old and new systems operating simultaneously in all locations is a test approach known as

parallel testing.

Which of the following is a component of general controls?

back-up and contingency planning

Which of the following statements related to application controls is correct?

Application controls relate to the processing of individual transactions.

General controls include all of the following except

processing controls.

Which of the following describes the process of implementing a new system in one part of the organization, while other locations continue to use the current system?

pilot testing

A ________ is responsible for controlling the use of computer programs, transaction files and other computer records and documentation and releases them to the operators only when authorized.

librarian

Security controls should require that users enter a(n) ________ before being allowed access to software and other related data files.

authorized password

Typical controls developed for manual systems which are still important in IT systems include

all of the above.

Which of the following controls prevent and detect errors while transaction data are processed?

processing

When purchasing software or developing in-house software,

a team of both IT and non-IT personnel should be involved in the decision process.

Output controls need to be designed for which of the following data integrity objectives?

detecting errors after the processing is completed

A control that relates to all parts of the IT system is called a(n)

general control.

Controls that are designed for each software application and are intended to help a company satisfy the transaction-related audit objectives are

application controls.

Which of the following is not an example of an applications control?

Back-up of data is made to a remote site for data security.

Which of the following is not a general control?

Computer performed validation tests of input accuracy.

Controls which are built in by the manufacturer to detect equipment failure are called

hardware controls.

Controls which are designed to assure that the information entered into the computer is authorized, complete, and accurate are called

input controls.

Which of the following tests determines that every field in a record has been completed?

completeness

An internal control deficiency occurs when computer personnel

originate changes in customer master files.

In an IT system, automated equipment controls or hardware controls are designed to

detect and control errors arising from the use of equipment.

If a control total were to be computed on each of the following data items, which would best be identified as a hash total for a payroll IT application?

employee numbers

Which of the following is not an application control?

logging in to the company's information systems via a password

Which of the following is not a general control?

processing controls

________ is the information technology and internal control processes an organization has in place to protect computers, networks, programs, and data from unauthorized access.

Cybersecurity

The most important output control is

review of data for reasonableness by someone who knows what the output should look like.

Parallel testing is used when old and new systems are operated simultaneously in all locations.

TRUE

Programmers should only be allowed to work with test copies of programs and data.

TRUE

Parallel testing can be used in combination with pilot testing to test new systems.

TRUE

The effectiveness of automated controls depends solely on the competence of the personnel performing the controls.

FALSE

Backup and contingency plans should also identify alternative hardware that can be used to process company data.

TRUE

A large portion of errors in IT systems result from data entry errors.

TRUE

Output controls focus on preventing errors during processing.

FALSE

Processing controls are a category of application controls.

TRUE

Controls that relate to a specific use of the IT system, such as the processing of sales or cash receipts, are called application controls.

TRUE

IT controls are classified as either input controls or output controls.

FALSE

A database management system

allows clients to create databases that include information that can be shared across multiple applications.

When auditing a client who uses a database management system, the auditor is principally aware of elevated risk due to the fact that

multiple users can access and update data files.

Firewalls are used to protect from

unauthorized external users.

Rather than maintain an internal IT center, many companies outsource their basic IT functions such as payroll to an

independent computer service center.

When the auditor is obtaining an understanding of the independent computer service center's internal controls, the auditor should

use the same criteria used to evaluate the client's internal controls.

________ protect(s) the security of electronic communication when information is transmitted and when it is stored.

Encryption

A(n) ________ is a computer resource deployment and procurement model that enables an organization to obtain IT resources and applications from any location via an Internet connection.

cloud computing environment

Firewalls can protect company data and software programs.

TRUE

LANs link equipment within a single or small cluster of buildings and are used within a company.

TRUE

Companies using e-commerce systems to transact business electronically do not need to be concerned about how their e-commerce partners manage IT systems risks.

FALSE