Chapter 11 Flashcards
11-20a
Which of the following would not be considered an inherent limitation of the potential effectiveness of an entity’s internal control structure?
- Mistakes in judgment
- Management override
- Incompatible duties
- Collusion among employees
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11-20b
Actions, policies, and procedures that reflect the overall attitude of management, directors, and owners of the entity about internal control relate to which of the following internal control components?
- Control activities
- Information and communication
- Risk assessment
- Monitoring
?
11-20c
Vendor account reconciliations are performed by three clerks in the accounts payable department on Friday of each week. The accounts payable supervisor reviews the completed reconciliations the following Monday to ensure they have been completed. The work performed by the supervisor is an example of which COSO component?
- Control activities
- Information and communication
- Risk assessment
- Monitoring
?
11-21a
Which of the following is an advantage of a computer-based system for transaction processing over a manual system? a computer-based system
- does not require as stringent a set of internal controls
- will produce a more accurate set of financial statements
- eliminates the need to reconcile control accounts and subsidiary ledgers
- will be more efficient in generating financial statements
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11-21b
Which of the following is generally NOT considered a category of IT general controls?
- Controls that determine whether a vendor number matches the preapproved vendors in the vendor master file
- Controls that restrict systemwide access to programs and data
- Controls that oversee the acquisition of application software
- Controls that oversee the day-to-day operation of IT applications
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11-21c
Which of the following is an example of an application control?
- The client uses access security software to limit access to each of the accounting applications
- Employees are assigned a user ID and password that must be changed every quarter
- The sales system automatically computes the total sale amount and posts the total to the sales journal master file
- Systems programmers are restricted from doing applications programming functions
?
11-22a
Which of the following situations is NOT an example of an inherent limitation of internal control?
- A programming error in the design of an automated control allows an employee to give himself an unauthorized pay increase
- Management’s failure to enforce control policies surrounding access to inventory allows employees to steal assets
- A lack of physical controls over the safeguarding of assets allows an employee to steal company assets
- A fraud scheme whereby an employee orders personal goods and his supervisor, who is in on the scheme, signs the checks to pay for those goods
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11-22b
Which of the following factors are included in an entity’s control environment?
- Participation of Those Charged with Governance = YES Integrity and Ethical Values = YES Organizational Structure = NO
- Participation of Those Charged with Governance = YES Integrity and Ethical Values = YES Organizational Structure = YES
- Participation of Those Charged with Governance = NO Integrity and Ethical Values = YES Organizational Structure = YES
- Participation of Those Charged with Governance = YES Integrity and Ethical Values = NO Organizational Structure = YES
?
11-22c
Which of the following factors are included in an entity’s control environment?
- Control activities set the tone of the organization
- Information and communication systems have to do with management’s analysis of risk
- Risk assessment relates to assessing the quality of the internal control structure over time
- Monitoring relates to ongoing assessment by management to determine whether controls are operating as intended
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