Audit Quiz - Chapter 10

Question 1

Achieving Operational Effectiveness and Efficiency is one of the three objectives of Internal Controls.

Answer 1

True

Question 2

Auditors review activities under all three of the Internal Control Broad Objectives when performing financial statement audits.

Answer 2

True

Question 3

Internal controls can never be absolutely effective, regard­less of the care followed in their design and implementation.

Answer 3

True

Question 4

Inherent Limitations usually can be completely eliminated.

Answer 4

False

Question 5

The auditor is less concerned with controls that affect the efficiency and effectiveness of company operations if such controls do not influence the fair presentation of financial statements.

Answer 5

True

Question 6

Auditors perform audit procedures to identify noncompliance with laws and regulations that may have a material effect on the financial statements.

Answer 6

True

Question 7

Risk Assessment is one of the five components of internal control that serves as the IC “umbrella.”

Answer 7

False

Question 8

While management assesses risks as a part of designing and operating internal controls to minimize errors and fraud, auditors assess internal controls risk to decide the evidence needed in the audit.

Answer 8

True

Question 9

The level of understanding internal control and extent of testing required for the audit of internal control exceeds what is required for an audit of only the financial statements.

Answer 9

True

Question 10

Auditing standards require auditors to obtain an understanding of internal control for every audit.

Answer 10

True