Test-Bank-for-Information-Technology-Auditing-4th-Edition-337695137-Chapter-1-pdf_134255.rtf

iChapter 1—Auditing and Internal Control
TRUE/FALSE
1. Corporate management (including the CEO) must certify monthly and
annually their organization’s internal controls over financial reporting.
PTS: 1
2. Both the SEC and the PCAOB require management to use the COBIT framework for
assessing internal control adequacy.
PTS: 1
3. Both the SEC and the PCAOB require management to use the COSO framework for
assessing internal control adequacy.
PTS: 1
4. A qualified opinion on management’s assessment of internal controls over the
financial reporting system necessitates a qualified opinion on the financial
statements?
PTS: 1
5. The same internal control objectives apply to manual and computer-based
information systems.
PTS: 1
6. The external auditor is responsible for establishing and maintaining the
internal control system.
PTS: 1
7. Segregation of duties is an example of an internal control procedure.
PTS: 1
8. Preventive controls are passive techniques designed to reduce fraud.
PTS: 1
9. A key modifying assumption in internal control is that the internal control system
is the responsibility of management.
PTS: 1

10. While the Sarbanes-Oxley Act prohibits auditors from providing non-
accounting services to their audit clients, they are not prohibited from performing
such services for non-audit clients or privately held companies.
PTS: 1
11. The Sarbanes-Oxley Act requires the audit committee to hire and oversee the
external auditors.
PTS: 1
12. Section 404 requires that corporate management (including the CEO) certify their
organization’s internal controls on a quarterly and annual basis.
PTS: 1
13. Section 302 requires the management of public companies to assess and formally
report on the effectiveness of their organization’s internal controls.
PTS: 1
14. Application controls apply to a wide range of exposures that threaten the integrity
of all programs processed within the computer environment.
PTS: 1
15. Advisory services is an emerging field that goes beyond the auditor’s traditional
attestation function.
PTS: 1
16. An IT auditor expresses an opinion on the fairness of the financial statements.
PTS: 1
17. External auditing is an independent appraisal function established within an
organization to examine and evaluate its activities as a service to the organization.
PTS: 1
18. External auditors can cooperate with and use evidence gathered by internal audit
departments that are organizationally independent and that report to the Audit
Committee of the Board of Directors.
PTS: 1
19. Tests of controls determine whether the database contents fairly reflect the
organization's transactions.
PTS: 1

20. Audit risk is the probability that the auditor will render an unqualified opinion on
financial statements that are materially misstated.