Question 1. Question :
(TCO 5) Which of the following is responsible for establishing internal controls for a public company?
Financial statement auditors
Management and auditors
Committee of Sponsoring Organizations
Question 2. Question :
(TCO 5) Sarbanes-Oxley requires management to issue an internal control report that includes two specific items. Which of the following is one of these two requirements?
A statement that management is responsible for establishing and maintaining an adequate internal control structure and procedures for financial reporting
A statement that management and the board of directors are jointly responsible for establishing and maintaining an adequate internal control structure and procedures for financial reporting
A statement that management, the board of directors, and the external auditors are jointly responsible for establishing and maintaining an adequate internal control structure and procedures for financial reporting
None of the above
Question 3. Question :
(TCO 5) Which of the following activities would be least likely to strengthen a company’s internal control?
Separating accounting from other financial operations
Maintaining insurance for fire and theft
Fixing responsibility for the performance of employee duties
Carefully selecting and training employees
Question 4. Question :
(TCO 5) Internal controls can never be regarded as completely effective. Even if company personnel could design an ideal system, its effectiveness depends on the
adequacy of the computer system.
proper implementation by management.
ability of the internal audit staff to maintain it.
competency and dependability of the people using it.
Question 5. Question :
(TCO 5) Which of the following is not one of the levels of an absence of internal controls?
Question 6. Question :
(TCO 10) Which of the following is not a benefit of using IT-based controls?
Ability to process large volumes of transactions
Ability to replace manual controls with computer-based controls
Reduction in misstatements due to consistent processing of transactions
Over-reliance on computer-generated reports
Question 7. Question :
(TCO 10) Programmers should do all but which of the following?
Test programs for proper performance
Evaluate legitimacy of transaction data input
Develop flowcharts for new applications
Programmers should perform each of the above
Question 8. Question :
(TCO 10) Which of the following is least likely to be used in obtaining an understanding of client general controls?
Examination of system documentation
Inquiry of client personnel (e.g. key users)
Observation of transaction processing
Reviews of questionnaires completed by client IT personnel
Question 9. Question :
(TCO 10) Auditors should evaluate the _____ before evaluating application controls because of the potential for pervasive effects.
Question 10. Question :
(TCO 10) Which of the following is not a category of an application control?