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Chapter 9: The Study of Internal...

1 .       In general, material irregularities perpetrated by which of the following are most difficult to detect?  

2 .       An auditor is least likely to test for the internal control that provides for  

3 .       Auditors do not obtain an understanding of internal control through  

4 .       An action taken to prevent, detect, and correct errors and irregularities in transactions is referred to as a  

5 .       Which of the following is not one of the elements of the internal control environment?  

6 .       A secondary objective of the auditor's study and evaluation of internal control is to provide 

7 .       An auditor's primary consideration regarding an entity's internal controls is whether the policies and procedures 

8 .       It is important for the CA to consider the competence of the clients' employees because their competence bears directly and importantly upon the 

9 .       Proper segregation of functional responsibilities in an effective system of internal accounting control calls for separation of the functions of 

10 .       The independent auditor should acquire an understanding of the internal audit function as it relates to the assessment of control risk because 

11 .       After obtaining an understanding of the internal control structure and assessing control risk of an entity, an auditor decided not to perform tests of controls. The auditor probably decided that 

12 .       Assessing control risk at below the maximum is most likely to involve 

13 .       After the auditor has prepared a flowchart of the internal accounting controls surrounding sales and evaluated the design of the system, the auditor would perform tests of controls on all control procedures 

14 .       Internal accounting controls are not designed to provide reasonable assurance that 

15 .       Which of the following statements is correct concerning an auditor's communication of internal control weaknesses noted in an audit? 

16 .       Responsibility for the establishment of an entity’s internal controls rests with the entity’s CA. [Hint]


17 .       Employee misunderstandings, carelessness, and management override may prevent adequately designed internal controls from being effective. [Hint]


18 .       The term "control environment" is synonymous with the term "internal controls." [Hint]


19 .       The components of internal control are the control environment, management's risk assessment, the accounting information and communication system, control activities, and monitoring. [Hint]


20 .       In order to achieve maximum accuracy, it is generally desirable to have one accounting employee record all aspects of a transaction from its origin to its disposition. [Hint]


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