Test%20Questions%20Chapter%20180

Test%20Questions%20Chapter%20180 - Chapter 18 Integrated...

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Chapter 18 Integrated Audits of Public Companies True/False Questions 1. Section 404 of the Sarbanes-Oxley Act of 2002 includes internal control reporting requirements for both management and auditors. Answer: True Difficulty: Easy 2. The Sarbanes-Oxley Act changed auditor association with a client's internal control from the review to the audit form of association. Answer: False Difficulty: Medium 3. The amount involved with a significant deficiency is at least a material amount. Answer: False Difficulty: Medium 4. The “as of date” for internal control reporting is ordinarily the last day of the fiscal year. Answer: True Difficulty: Easy 5. The lack of effective antifraud programs is always considered a material weakness. Answer: False Difficulty: Hard 6. PCAOB Standard No. 2 suggests that auditors emphasize nonroutine transactions as contrasted to routine transactions in their consideration of internal control. Answer: False Difficulty: Hard 7. An auditor's report on internal control ordinarily includes assurance both on management's assessment and on internal control itself. Answer: True Difficulty: Medium 8. Tests of operating effectiveness ordinarily include reperformance of the application of controls. Answer: True Difficulty: Easy Whittington, Principles of Auditing, Fifteenth Edition 25
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Chapter 18 Integrated Audits of Public Companies 9. A client imposed scope limitation relating to the audit of internal control ordinarily results in a qualified report. Answer: False Difficulty: Medium 10. If management's report on internal control expresses an adverse assessment due to the existence of material weakness, the auditors would agree with that assessment and provide an unqualified opinion on it. Answer: True Difficulty: Hard Multiple Choice Questions 11. Which of the following is most likely to be considered a material weakness in internal control? A) An ineffective control environment. B) Restatement of previously issued financial statements due to a change in accounting principles. C) Inadequate controls over non-systematic transactions. D) Weaknesses in risk assessment. Answer: A Difficulty: Hard 12. Which must management communicate to the audit committee? Known Material Weaknesses Known Significant Deficiencies A) Yes Yes B) Yes No C) No Yes D) No No Answer: A Difficulty: Medium 26 Whittington, Principles of Auditing, Fifteenth Edition
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Chapter 18 Integrated Audits of Public Companies 13. Which must the auditor communicate to the audit committee? Known Material Weaknesses Known Significant Deficiencies A) Yes Yes B) Yes No C) No Yes D) No No Answer: A Difficulty: Medium 14. Walkthroughs provide the auditors with primary evidence to: Confirm their understanding effectiveness of controls Substantiate account balances A) Yes Yes B) Yes No C) No Yes D) No No Answer: B Difficulty: Medium 15. Walkthroughs provide evidence that helps the auditor to: Evaluate design effectiveness of controls Confirm whether controls have
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This note was uploaded on 04/09/2011 for the course ACCT 4773 taught by Professor Pro during the Spring '11 term at Dallas.

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Test%20Questions%20Chapter%20180 - Chapter 18 Integrated...

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