Page 1 of 19 Atfq3 pffa Auditing and Assurance Principles, Governance and Ethics w/ Answers 1.Which of the following is not a component of internal control? a. Control risk. c. Information and communication. b. Monitoring. d. The control environment. (02-04-7) 2.Which of the following factors are included in an entity’s control environment?a b c d Audit committee Yes Yes No Yes Integrity and ethical values Yes No Yes Yes Organizational structure No Yes Yes Yes AICPA 0591 3.Basic to a proper control environment are the quality and integrity of personnel who must perform the prescribed procedures. Which is not a factor in providing for competent personnel? Gleim 4.Control activities constitute one of the five components of internal control. Control activities do not encompass Gleim 5.Proper segregation of duties reduces the opportunities to allow persons to be in positions to both a.Journalize entries and prepare financial statements. b.Record cash receipts and cash disbursements. c.Establish internal controls and authorize transactions. d.Perpetuate and conceal errors and irregularities. AICPA 1194 6.Which of the following are compatible functions in a well-designed internal control structure. RPCPA 0595 7.Internal control should follow certain basic principles to achieve its objectives. One of these principles is the segregation of functions. Which one of the following examples does not violate the principle of segregation of functions? a.The treasurer has the authority to sign checks but gives the signature block to the assistant treasurer to run the check-signing machine. b.The warehouse clerk, who has the custodial responsibility over inventory in the warehouse, may authorize disposal of damaged goods. c.The sales manager has the responsibility to approve credit and the authority to write off accounts. d.The department time clerk is given the undistributed payroll checks to mail to absent employees. CMA 1288 3-22 8.If internal control is well designed, two tasks that should be performed by different persons are a.Approval of bad debt write-offs, and reconciliation of the accounts payable subsidiary ledger and controlling account. b.Distribution of payroll checks and approval of sales returns for credit. c.Posting of amounts from both the cash receipts journal and cash payments journal to the general ledger.
- Fall '12