Chap005 - Chapter 05 - Risk Assessment: Internal Control...

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Chapter 05 - Risk Assessment: Internal Control Evaluation Chapter 05 Risk Assessment: Internal Control Evaluation Multiple Choice Questions 1. An audit team's responsibility would not include A. Designing client's internal controls B. Documentation of understanding of a client's internal controls C. Communicating internal control deficiencies D. Assessing the effectiveness a client's internal controls Difficulty: Easy Source: Original 2. The appropriate separation of functional responsibilities does not include` A. Authorization to execute transactions B. Recording of transactions C. Custody of assets involved in the transactions D. Data preparation Difficulty: Easy Source: Original 3. A set of characteristics that defines good control working relationships in a company is referred to as` A. Management assertions B. The control environment C. Control risk assessment D. Functional responsibilities Difficulty: Easy Source: Original 5-1
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Chapter 05 - Risk Assessment: Internal Control Evaluation 4. Controls intended to ensure that transactions are recorded in the right period are designed to achieve the assertion of` A. Occurrence B. Accuracy C. Valuation or allocation D. Cutoff Difficulty: Easy Source: Original 5. Internal control is described as separating the following duties and responsibilities except` A. Transaction authorization B. Recordkeeping C. Custody of, or access to, assets D. Hiring of employees Difficulty: Medium Source: Original 6. After obtaining an understanding of the entity's internal control and assessing control risk, an auditor of a non public company decided not to perform additional tests of controls. The auditor most likely concluded that the` A. Additional evidence to support a further reduction in control risk was not cost beneficial B. Assessed level of inherent risk exceeded the assessed level of control risk C. Internal control structure was properly designed and justifiably may be relied on D. Evidence obtainable through tests of controls would not support an increased level of control risk Difficulty: Medium Source: AICPA 5-2
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Chapter 05 - Risk Assessment: Internal Control Evaluation 7. Regardless of the assessed level of control risk, an auditor of a non public company would perform some` A. Tests of controls to determine the effectiveness of internal control policies B. Analytical procedures to verify the design of internal control procedures C. Substantive tests to restrict detection risk for significant transaction classes D. Dual purpose tests to evaluate both the risk of monetary misstatement and preliminary control risk Difficulty: Hard Source: AICPA 8. The "obtaining an understanding" work phase (Phase 1) of internal control evaluation would not give auditors an overall acquaintance with the client's` A. Control environment B. Information and communication system C. Control procedure effectiveness D. Monitoring activities Difficulty: Hard Source: Original 9. Which of the following is an Information Technology General Control?`
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This note was uploaded on 05/26/2011 for the course ACCT 403 taught by Professor Mark during the Spring '10 term at Strayer.

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Chap005 - Chapter 05 - Risk Assessment: Internal Control...

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