chap 11 internal control objectives

Question 1

an important objective of internal controls is accurate financial and nonfinancial info about the companys operations for _____ _____?

Answer 1

decision making

Question 2

internal conrols within a compnay encourage efficient and effective use of its _____ to optimize the company’s ____

Answer 2

resources goals

Question 3

in order to support the assessment of the control risk component of the audit risk model, auditors must do what 2 things?

Answer 3

1. obtain an understanding of internal control 2. gather evidence to support their assessment of control risk

Question 4

what are the 3 broad objectives managment has in designing an effective internal control system?

Answer 4

1. reliability of reporting 2. efficiency and effectiveness of operations 3. compliance with laws and regulations

Question 5

what does section 404 of the sarbanes oxley act require of management and auditors of public companies in regards to internal control?

Answer 5

management- required to assess and report on the effectiveness of their internal control over financial reporting auditors- of large public companies required to report on the effectiveness of internal control over financial reporting

Question 6

what system consists of policies and procedures designed to provide management with reasonable assurance that the company achieves its objectives and goals

Answer 6

internal control system

Question 7

what is internal control?

Answer 7

a system consisting of policies and procedures designed to provide management with reasonable assurance that the company achieves its objectives and goals

Question 8

the auditors focus in both the audit of FSs and the audit of internal controls is on controls over what? (3)

Answer 8

1. reliability of financial reporting 2. operations 3. compliance with laws and regulations that could materially affect financial reporting

Question 9

what is the objective of effective internal control over financial reporting?

Answer 9

for management to be able to fullfill their legal and professional financial reporting responsibilities of making sure that information is fairly presented in accordance with reporting requirements of accounting frameworks such as GAAP and IFRS

Question 10

an internal control system consists of what 2 parts?

Answer 10

1. policies 2. procedures