Term
| What are the components of internal control per COSO's updated Internal Control-Integrated Framework? |
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Definition
| Control Environment, risk assessment, control activities, information and communication,and monitoring |
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Term
| Which of the following components of internal control over financial reporting sets the tone for the organization? |
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Definition
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Term
| Segregation of duties is best achieved in which of the following scenarios? |
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Definition
| The payroll department cannot add employees to the payroll or change pay rates without the explicit authorization of the personnel department |
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Term
| Which of the following statements about application controls is true? |
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Definition
| Application controls are intended to mitigate the risks associated with data input, data processing, and data output |
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Term
| Which of the following would be considered an effective implementation of the information and communication component of COSO's updated internal control - integrated framework? |
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Definition
| The organization has a whistle-blower function that allows parties internal and external to the organization to communicate concerns about possible inappropriate actions in the organization's operations |
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Term
| Which of the following is the most accurate statement related to the monitoring component of COSO's updated Internal Control- Integrated Framework? |
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Definition
| Monitoring is a process that provides feedback on the effectiveness of each component of internal control |
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Term
| Which of the following is not a step in the framework for professional decision making? |
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Definition
| Asses the likelihood of fraud |
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Term
| Utilitarianism does not require which of the following when a person considers how to resolve an ethical dilemma? |
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Definition
| Identification of the motivation of the person facing the ethical dilemma |
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Term
| Which of the following statements is false? |
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Definition
| In performing audit services, the auditor may accept only contingent feels for publicly-traded audit clients |
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Term
| Which of the following is included as part of the AICPA's principles governing an audit? |
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Definition
| An audit has inherited limitations such that auditor cannot provide absolute assurance about whether the financial statements are free of misstatement |
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Term
| Which of the following statements is true about the audit opinion formulation process presented in this chapter? |
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Definition
| The audit opinion formulation process is based on the premise that management has responsibility to prepare the financial statement and maintain internal control over financial reporting. |
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Term
| Which of the following is a true statement regarding audit evidence and audit procedures? |
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Definition
| The auditor has a responsibility to design and perform audit procedures to obtain sufficient appropriate audit evidence |
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Term
| Which of the following statements is a true statement regarding client acceptance? |
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Definition
| Auditors in the U.S. are required to communicate with the predecessor auditor before accepting a new client |
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Term
| Which of the following statements is correct regarding the design of controls related to credit limits? |
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Definition
| The effectiveness of the control design is contingent on the credit managers process for establishing and reviewing credit limits |
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Term
| Which of the following tests of controls would not typically be used in assessing control design effectiveness? |
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Definition
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Term
| In performing substantive procedures, which if the following statements provides appropriate guidance to the auditor? |
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Definition
| The auditor can perform both substantive analytical procedures and substantive tests of details |
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Term
| In which of the following scenarios is the auditor likely to obtain more or more rigorous substantive evidence? |
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Definition
| When the design of controls is determined to be ineffective |
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Term
| Which of the following procedures is least likely to be performed during the Phase V of the audit opinion formulation process? |
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Definition
| Performance of preliminary analytical review procedures |
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Term
| Which of the following statements is correct regarding the auditors report on a public company's internal control over financial reporting? |
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Definition
| The auditor must explicitly reference the criteria for evaluating internal control, using the COSO framework, for example. |
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Term
| The auditor discovers that there is a key control deficiency over sales contracts and that some contracts near the end of the year are not properly reviewed by management. Which of the following would be the best way for the auditor to respond to the control deficiency identified? |
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Definition
| Expand the sample size for substantive testing and review of contracts during the latter part of the year to determine if revenue is appropriately identified. |
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Term
| Which of the following statements best describes what is meant by the term appropriateness of audit evidence? |
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Definition
-Appropriateness is a measure of the quality of audit evidence
-Appropriateness refers to the relevance and reliability of audit evidence |
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Term
| Analytical procedures are best used as a substantive audit procedure in which of the following scenarios? |
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Definition
| Substantive analytical procedures would not be appropriate in any of the above scenarios |
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Term
| The auditor wishes to test the completeness assertion. Which of the following statements is true regarding the auditors work flow? |
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Definition
| The auditor would perform a process referred to as tracing |
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Term
| Which of the following statements if false regarding substantive analytical procedures? |
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Definition
| Substantive analytical procedures would be performed after tests of details |
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Term
| Which of the following statements is true regarding the sufficiency of evidence needed to test an account? |
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Definition
| Evidence sufficiency is affected by the quality of evidence |
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Term
| Which of the following procedures would an auditor typically perform first when assessing the reasonableness of managements estimate of its pension liability ? |
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Definition
| Develop an understanding of managements process for developing the estimate |
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Term
| Which of the following statements is most accurate regarding the auditors primary focus on a clients related party transactions? |
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Definition
| The auditor wants reasonable assurance that all related party transactions have been appropriately disclosed |
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Term
| Which of the following transactions would be least likely to be a related party transaction? |
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Definition
| Writing-off obsolete inventory prior to year end |
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Term
| Which of the following items would typically not be included in the heading of a workpaper? |
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Definition
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