internal control quiz

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Home > March 2010 > Internal Control: Test Your Knowledge Share This Article | Print BUSINESS & INDUSTRY Internal Control: Test Your Knowledge BY JAMES SCHAEFER, CPA, DBA AND JOY V. PELUCHETTE, DBA MARCH 2010 Today many companies recognize the desirability as well as the requirement to have an effective system of internal control. Yet, designing and implementing a cost-effective system of internal control is a daunting, if not overwhelming, task. One way to overcome resistance to internal control is to educate stakeholders at every level of the organization about its advantages. Try the following quiz to test your knowledge of internal control and consider using it as a teaching tool for others in your organization. 1. Houston Helpers, a faith-based group that offers help to people in need, has hired Janet Wells, a local CPA, to train its professional staff in the basics of internal control. As Wells begins her presentation, a participant interrupts by saying, “We are not like other organizations. How can we talk about common elements of internal control when we are a faith-based service provider?” a. The participant is correct; there are no generally accepted frameworks for internal control. b. The participant is incorrect; there are generally accepted frameworks for internal control, regardless of industry. 2. Internal control is a process designed to provide reasonable assurance regarding the achievement of which objective?
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a. Effectiveness and efficiency of operations b. Reliability of financial reporting c. Compliance with applicable laws and regulations d. All of the above 3. CS Inc. has asked you to join its board of directors. Before agreeing to do so, you realize that it is important that you understand the company’s approach to Enterprise Risk Management (ERM). Which of the following is NOT true about ERM? a. ERM is a bottom-up view of the key risks facing the organization. b. ERM links growth, risk and return. c. ERM aligns risk appetite and strategy. d. ERM identifies and manages cross-enterprise risk. 4. The directors of Evans Corp. are reevaluating their “tone at the top.” They realize the phrase “tone at the top” is used to describe the example set by directors, officers and executives through their statements and daily actions. The board members also realize written policies need to reinforce the tone, but are unsure how to integrate written policies into the “tone at the top.” If you were advising the board, what would you tell them is the cornerstone of these policies? a. A comprehensive code of conduct b. A conflict-of-interest policy c. Organization communications d. Protection of the organization’s assets 5. Your employer has asked you to develop controls to help prevent duplicate payments. Which of the following steps would NOT be appropriate in developing such a policy? a.
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This note was uploaded on 02/15/2012 for the course GERM 200 taught by Professor Kuhmar during the Spring '10 term at SUNY Albany.

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internal control quiz - Home > March 2010 > Internal...

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