ACCT 444 Week 4 Quiz

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 ITbased
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.