chapter 1 | tf Flashcards
Corporate management (including the CEO) must certify monthly and annually their organization’s internal controls over financial reporting.
F
Both the SEC and the PCAOB require management to use the COBIT framework for assessing internal control adequacy.
F
Both the SEC and the PCAOB require management to use the COSO framework for assessing internal control adequacy.
F
A qualified opinion on management’s assessment of internal controls over the financial reporting system necessitates a qualified opinion on the financial statements?
F
The same internal control objectives apply to manual and computer-based information systems.
T
The external auditor is responsible for establishing and maintaining the internal control system.
F
Segregation of duties is an example of an internal control procedure.
T
Preventive controls are passive techniques designed to reduce fraud.
T
The Sarbanes-Oxley Act requires only that a firm keep good records.
F
A key modifying assumption in internal control is that the internal control system is the responsibility of management.
T
While the Sarbanes-Oxley Act prohibits auditors from providing non-accounting services to their audit clients, they are not prohibited from performing such services for non-audit clients or privately held companies.
T
The Sarbanes-Oxley Act requires the audit committee to hire and oversee the external auditors.
T
Section 404 requires that corporate management (including the CEO) certify their organization’s internal controls on a quarterly and annual basis.
F
Section 302 requires the management of public companies to assess and formally report on the effectiveness of their organization’s internal controls.
F
Application controls apply to a wide range of exposures that threaten the integrity of all programs processed within the computer environment.
F
IT auditing is a small part of most external and internal audits.
F
Advisory services is an emerging field that goes beyond the auditor’s traditional attestation function.
T
An IT auditor expresses an opinion on the fairness of the financial statements.
F
External auditing is an independent appraisal function established within an organization
to examine and evaluate its activities as a service to the organization.
F
External auditors can cooperate with and use evidence gathered by internal audit departments that are organizationally independent and that report to the Audit Committee of the Board of Directors.
T
Tests of controls determine whether the database contents fairly reflect the organization’s transactions.
F
Audit risk is the probability that the auditor will render an unqualified opinion on
financial statements that are materially misstated.
T
A strong internal control system will reduce the amount of substantive testing that must be performed.
T
Substantive testing techniques provide information about the accuracy and completeness of an application’s processes.
F
