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AUDITING - CHAPTERS 10 - 14 1. For an internal audit function to be effective, it is essential that the internal audit staff independent of the operating departments. b. be independent of the accounting department. directly to a high level of authority within the organization. d. achieve all of the above. 2. If evidence was obtained in the prior year's audit that indicates a key control was operating effectively, will be unnecessary to test that control this year. b. the tests of that control will be reduced this year. c.the auditor would not test this area again this year. d. the extent of tests of that control may be reduced this year if the auditor determines that it is still in place. 3. Internal controls can never be regarded as completely effective. Even if systems personnel could design an ideal system, its effectiveness depends on the a.adequacy of the computer system. b. proper implementation by management. c.ability of the internal audit staff to maintain it. d. competency and dependability of the people using it. 4. Which of the following is not a control related to safeguarding IT equipment, programs, and data files? a.physical controls. b. automated internal verification procedures. c.access controls. d. backup and recovery procedures. 5 . Which of the following tests would not be a program control? a.Completeness test. b. Validity test. c.Parity test. d. Limit test. 6. It is important for the CPA to consider the competence of the audit clients' employees because their competence bears directly and importantly upon the a.cost/benefit relationship of the system of internal control. b. achievement of the objectives of the system of internal control. c.comparison of recorded accountability with assets. d. timing of the tests to be performed. 7. The Foreign Corrupt Practices Act of 1977 a.amended the securities acts of 1933 and 1934. b. defined "proper record-keeping systems." c.imposes a penalty of fine and imprisonment upon the auditor for a violation. d. provides for all three of the above. 8. The procedures for proper recordkeeping should be spelled out in a.the corporate bylaws. b. run manuals. manuals. d. minutes of the board of directors. 9. An auditor's attempt to gain an understanding of the accounting system is typically accomplished and documented by a.a narrative description of the system. b. a flowchart.
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c.either a or b. d. a questionnaire. 10 . Control risk is a measure of the auditor's expectation that the internal controls a.will prevent material misstatements from occurring. b. will detect and correct material misstatements. c.will either prevent material misstatements or detect and correct them. d. will neither prevent material misstatements nor detect and correct them. 11.
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This note was uploaded on 02/22/2010 for the course CCA 401 taught by Professor Mohammad during the Spring '10 term at Abraham Baldwin Agricultural College.

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