In an audit of a non public company the less control risk there is the smaller

In an audit of a non public company the less control

This preview shows page 24 - 27 out of 27 pages.

98. In an audit of a non-public company, the less control risk there is, the smaller the amount ofeasy planned substantive evidence that is required.a a. Trueb. False99. As a client’s information system becomes more complex, it is likely that an auditor willeasy decrease reliance on controls and increase substantive tests to support a control risk assessment.b 100. When a company designs and implements internal controls, cost of the controls is not a valideasy consideration.b 101. (Public) PCAOB Standard 2 requires auditors to perform walkthroughs to assist in understanding
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easy internal control.a 102. Adequate documents and records is a subcomponent of the control environment.easy a. Trueb. Falseb Arens/Elder/Beasley103. For proper internal control, there should be adequate separation of duties. However, the extenteasy of separation of duties considered “adequate” depends heavily on the size of the organization.a a. Trueb. False104. In an audit of a non-public company, the auditor’s assessment of control risk and the extent ofmedium tests of controls are inversely related.a 105. Smaller companies usually have more extensive internal controls than larger companies whichmedium result in fewer frauds being committed at small companies.b 106. (Public) To issue an unqualified opinion on internal control over financial reporting, there must be nomedium identified material weaknesses and no restrictions on the scope of the audit.a a. Trueb. False107. (SOX) The Sarbanes-Oxley Act of 2002 requires that public companies issue an internal control report.medium a. Truea b. False108. The most important component of internal control is risk assessment.medium b 109. The primary emphasis by auditors when evaluating and testing internal control is on controlsmedium over classes of transactions rather than controls over account balances.
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a a. Trueb. False110. When internal controls over a given financial statement account are assessed as highly effective,medium the auditor need not obtain audit evidence for that account beyond testing the controls.b 111. The chart of accounts is a control and is closely related to the controls related to adequatemedium documents and records.a a. Trueb. False112. Auditing standards prohibit reliance on the work of internal auditors due to the lack ofmedium independence of the internal auditors.b a. Trueb. False113. If an auditor wishes to rely on the work of internal auditors (IA), the auditor must obtainmedium satisfactory evidence related to the IA’s competence, integrity, and objectivity.a Arens/Elder/Beasley114. Procedures used to obtain an understanding of internal control are normally performed on fewermedium transactions than procedures used to test controls.
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