2 Flashcards
The Greensburg Agriculture Products employee survey related to fraud includes this statement: “We are discouraged from sharing our computer passwords with others.” This statement best relates to which of the following fraud management principles and processes?
Selecting, developing, and deploying fraud controls
Overland Stage and Transport uses a fraud risk assessment heat map that charts the significance (on the vertical axis) and the likelihood (on the horizontal axis) of frauds as a part of its fraud risk management program. The company’s use of a fraud risk heat map best relates to which of the following activities?
Performing a comprehensive fraud risk assessment
This component of internal control concerns the policies and procedures that ensure that actions are taken to address the risks related to the achievement of management’s objectives.
Control activities.
This component of internal control concerns testing the system and its data.
Monitoring.
According to the 17 COSO control principles, risk reduction primarily relates to which fundamental component of internal control:
Control activities
Milo Corp. maintains daily backups of its accounting system in a fireproof vault in the file library. Weekly, monthly, and annual backups are stored in a secure, fireproof vault at an off-site location.
Maintenance of the backup files is an example of
a corrective control
Soylent Corporation makes food products for distribution by aid agencies to developing countries. Although the company’s products are considered highly safe and nutritious, they are often too costly for the budgets of the aid agencies that would like to purchase and distribute them. Because of this, Soylent Corporate may want to consider
Evaluating ERM costs.
Which of the following is the best description of the effects of poorly implemented risk responses?
The risk of incorrect payments to customers impacting the entity’s financial results.
Mortu-wary company develops software for funeral homes and cemeteries. In response to recent financial results that are better, and less volatile, than expected, Bert Mortu and Nancy Wary (the co-owners) should consider:
increasing their risk appetite for some future investments
Rekall, a medical services company, has recently made two announcements related to its newly created big data services unit.
A statement that identifies who is responsible for specific data in the system and what their responsibilities are
A statement that identifies the primary hardware and software that will be implemented in the new system
In relation to COSO’s ERM framework related to leveraging information systems, statement 1 most closely relates to ______________ while statement 2 most closely relates to: ____________________.
data and information governance; data management architecture
In the statement “quantity supplied is a function of price,” are the variables quantity and price dependent or independent variables?
Dependent
Independent
If demand for a product is elastic, what would be the effect of a price increase and a price decrease on total revenue (TR) generated?
TR Decrease
TR Increase
Which of the following characteristics would indicate that an item sold would have a high price elasticity of demand?
The item has many similar substitutes
When maximizing utility in economics, what is being maximized?
satisfaction
According to the law of diminishing returns, which one of the following is correct?
The marginal product (output) falls as more units of a variable input are added to fixed inputs
