ACCT 444 Week 4 Quiz

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ACCT 444 Week 4 Quiz

1. (TCO 5) Which of the following is responsible for establishing internal controls for a public company? (Points : 3) Management Financial statement auditors Management and auditors Committee of Sponsoring Organizations 1. (TCO 5) Which of the following parties provides an assessment of the effectiveness of internal control over financial reporting for public companies? (Points : 3) Management Financial statement auditors Management and the financial statement auditors Committee of Sponsoring Organizations 1. (TCO 5) Which of the following is responsible for establishing a private company’s internal control? (Points : 3) Management Auditors Management and auditors Committee of Sponsoring Organizations 2. (TCO 5) Which section of the Sarbanes-Oxley Act requires management to issue an internal control report? (Points : 3) 202 203 404 408   2. (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? (Points : 3) 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 2. (TCO 5) Internal control reports issued by public companies must identify the framework used to evaluate the effectiveness of internal control. Which of the following is the most common framework in the U.S.? (Points : 3) Effective Internal Control Framework-AICPA Internal Control-Integrated Framework-COSO Enterprise Internal Control-COSO There is no common framework used in the U.S. 3. (TCO 5) Which of the following activities would be least likely to strengthen a company’s internal control? (Points : 3) 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 3. (TCO 5) Management’s tests of operating effectiveness might include which of the following types of procedures? (Points : 3) Inspection of relevant documentation Inquiries of personnel Reperformance of the application of controls All of the above 3. (TCO 5) Which of management’s concerns with respect to implementing internal controls is the auditor primarily concerned? (Points : 3) Efficiency of operations Reliability of financial reporting Effectiveness of operations Compliance with applicable laws and regulations 4. (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 (Points : 3) 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. 4. (TCO 5) Even with the most effectively designed internal control, the auditor must obtain audit evidence, beyond testing the controls, for every (Points : 3) transaction. financial statement account. material financial statement account. financial statement account that will be relied upon by third parties. 4. (TCO 5) The essence of an effectively controlled organization lies in the (Points : 3) effectiveness of its independent auditor. effectiveness of its internal auditor. attitude of its employers. attitudes of its management. 5. (TCO 5) Which of the following is not one of the levels of an absence of internal controls? (Points : 3) Major deficiency Material weakness Significant deficiency Control deficiency 5. (TCO 5) To determine if a significant internal control deficiency or deficiencies are a material weakness, they must be evaluated on their (Points : 3) likelihood. materiality or significance. both A and B are correct. neither A nor B is correct. 6. (TCO 10) Which of the following is not a benefit of using IT-based controls? (Points : 3) 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 6. (TCO 10) Which of the following is not a risk to IT systems? (Points : 3) Need for IT experience Separation of IT duties Improved audit trail Hardware and data vulnerability 6. (TCO 10) Which of the following is not a risk specific to IT environments? (Points : 3) Reliance on the functioning capabilities of hardware and software Increased human involvement Loss of data due to insufficient backup Reduced segregation of duties 7. (TCO 10) Which of the following IT duties should be separated from the others? (Points:3) Systems development Operations Data control All of the above 7. (TCO 10) The extent to which IT duties are separated in an organization depends on (Points : 3) the organization’s size. the organization’s complexity. both A and B. neither A nor B. 7. (TCO 10) Programmers should do all but which of the following? (Points : 3) Test programs for proper performance Evaluate legitimacy of transaction data input Develop flowcharts for new applications Programmers should perform each of the above 8. (TCO 10) Which of the following is a category of general controls? (Points : 3) Processing controls Output controls Physical and online security Input controls 8. (TCO 10) General controls include all of the following except (Points : 3) systems development. online security. processing controls. hardware controls. 8. (TCO 10) Which of the following is least likely to be used in obtaining an understanding of client general controls? (Points : 3) Examination of system documentation Inquiry of client personnel (e.g. key users) Observation of transaction processing Reviews of questionnaires completed by client IT personnel   9. (TCO 10) Controls that apply to a specific element of the system are called (Points : 3) user controls. general controls. systems controls. application controls.   9. (TCO 10) A control that relates to all parts of the IT system is called a(n) (Points : 3) general control. systems control. universal control. applications control. 9. (TCO 10) Auditors should evaluate the _____ before evaluating application controls because of the potential for pervasive effects. (Points : 3) input controls control environment processing controls general controls 10. (TCO 10) Which of the following is not an example of an application control? (Points: 3) An equipment failure causes system downtime. There is a preprocessing authorization of the sales transactions. There are reasonableness tests for the unit selling price of a sale. After processing, all sales transactions are reviewed by the sales department. 10. (TCO 10) Which of the following is not a category of an application control? (Points : 3) Processing controls Output controls Hardware controls Input controls

10. (TCO 10) Which of the following statements related to application controls is correct? (Points : 3)

Application controls relate to various aspects of the IT function, including software acquisition and the processing of transactions.
Application controls relate to various aspects of the IT function, including physical security and the processing of transactions in various cycles.
Application controls relate to all aspects of the IT function.
Application controls relate to the processing of individual transactions.