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? Major deficiency Material weakness Significant deficiency Control deficiency 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. input controls control environment processing controls general controls Question 10. Question : (TCO 10) Which of the following is not a category of an application control? Processing controls Output controls Hardware controls Input controls