Chapter 8: Internal controls I

Question 1

Which of the following is not one of the five principles of COBIT 5?

a. Meeting stakeholder needs.
b. Business processes.
c. Covering the enterprise end-to-end.
d. Applying a single integrated framework.

Answer 1

Which of the following is not one of the five principles of COBIT 5?

a. Meeting stakeholder needs.

*b. Business processes.

c. Covering the enterprise end-to-end.
d. Applying a single integrated framework.

Question 2

Based on the COSO definition of internal controls, which of the following is NOT an aim of internal controls?

a. Effective and efficient operations
b. Reliable financial reporting
c. Compliance with laws and regulations
d. Safe workplace

Answer 2

Based on the COSO definition of internal controls, which of the following is NOT an aim of internal controls?

a. Effective and efficient operations
b. Reliable financial reporting
c. Compliance with laws and regulations

*d. Safe workplace

Question 3

Which of the following is related to corporate governance?

(i) Goal setting.
(ii) Risk management.
(iii) Performance measurement and management.
a. (i) (ii) (iii)
b. (i) (ii) only
c. (ii) (iii) only
d. (i) (iii) only

Answer 3

Which of the following is related to corporate governance?

(i) Goal setting.
(ii) Risk management.
(iii) Performance measurement and management.

*a. (i) (ii) (iii)

b. (i) (ii) only
c. (ii) (iii) only
d. (i) (iii) only

Question 4

COBIT 5 is designed to be used by which type of organisations?

a. Organisations of all sizes, whether commercial, not-for-profit or the public sector.
b. Small to medium size commercial entities.
c. Public, not-for-profit and also governmental organisations.
d. Commercial banks and other financial institutions.

Answer 4

COBIT 5 is designed to be used by which type of organisations?

*a. Organisations of all sizes, whether commercial, not-for-profit or the public sector.

b. Small to medium size commercial entities.
c. Public, not-for-profit and also governmental organisations.
d. Commercial banks and other financial institutions.

Question 5

What is the connection between the concept of accountability and corporate governance?

a. The board reviews poor decisions and punishes the person responsible.
b. The board delegates decision making to employees but retains ultimate responsibility.
c. Decisions are made by the person who needs to act on the decision irrespective of their position in the organisation.
d. Board members are only accountable for decisions made by the board.

Answer 5

What is the connection between the concept of accountability and corporate governance?

a. The board reviews poor decisions and punishes the person responsible.

*b. The board delegates decision making to employees but retains ultimate responsibility.

c. Decisions are made by the person who needs to act on the decision irrespective of their position in the organisation.
d. Board members are only accountable for decisions made by the board.

Question 6

Answer 6

Question 7

Answer 7

Question 8

IT governance is concerned with:

a. ensuring that the correct IT investment is always made.
b. controlling the use of IT within the organisation.
c. mandating selection procedures for new IT investments.
d. policies and procedures helping to align the use of IT and strategy.

Answer 8

IT governance is concerned with:

a. ensuring that the correct IT investment is always made.
b. controlling the use of IT within the organisation.
c. mandating selection procedures for new IT investments.

d. policies and procedures helping to align the use of IT and strategy.

Question 9

Different transactions and events are NOT impacted by which of the following assertion?

a. Completeness and accuracy
b. Occurrence and cut-off
c. Classification
d. Timeliness

Answer 9

Different transactions and events are NOT impacted by which of the following assertion?

a. Completeness and accuracy
b. Occurrence and cut-off
c. Classification

*d. Timeliness

Question 10

Corporate governance is about:

(i) the many relationships in which an organisation is involved and how these relationships are managed.
(ii) putting in place policies that allow for the various relationships of the organisation to be successfully managed.
(iii) putting in place structures that allow for the various relationships of the organisation to be successfully managed.
a. (i) only
b. (i) (ii) only
c. (i) (iii) only
d. (i) (ii) (iii)

Answer 10

Corporate governance is about:

(i) the many relationships in which an organisation is involved and how these relationships are managed.
(ii) putting in place policies that allow for the various relationships of the organisation to be successfully managed.
(iii) putting in place structures that allow for the various relationships of the organisation to be successfully managed.
a. (i) only
b. (i) (ii) only
c. (i) (iii) only

*d. (i) (ii) (iii)

Question 11

What are the main obligations of the organisation under corporate social responsibility (CSR) principles?

a. Under CSR principles the obligations of the organisation are just limited to shareholders through financial reporting
b. Under CSR principles the obligations of the organisation are limited to economic performance only.
c. Under CSR principles the obligations of the organisation include economic performance as well as benefiting employees, the community in which it operates and broader society.
d. None of the above.

Answer 11

What are the main obligations of the organisation under corporate social responsibility (CSR) principles?

a. Under CSR principles the obligations of the organisation are just limited to shareholders through financial reporting
b. Under CSR principles the obligations of the organisation are limited to economic performance only.

*c. Under CSR principles the obligations of the organisation include economic performance as well as benefiting employees, the community in which it operates and broader society.

d. None of the above.

Question 12

Answer 12

Question 13

To which of the following risks are organisations that depend on the Internet for trading through e-commerce particularly vulnerable.

a. risk of network disruption
b. risk of key suppliers moving to other organisations
c. risk of new competitors taking market position
d. risk of unauthorised access to online systems

Answer 13

To which of the following risks are organisations that depend on the Internet for trading through e-commerce particularly vulnerable.

*a. risk of network disruption

b. risk of key suppliers moving to other organisations
c. risk of new competitors taking market position
d. risk of unauthorised access to online systems

Question 14

All account balances should demonstrate the following assertions:

a. completeness, accuracy, classification, and valuation and allocation
b. valuation and allocation, rights and obligations, completeness, and existence
c. rights and obligations, completeness, accuracy, classification
d. classification, value and allocation, existence, and rights and obligations

Answer 14

All account balances should demonstrate the following assertions:

a. completeness, accuracy, classification, and valuation and allocation

*b. valuation and allocation, rights and obligations, completeness, and existence

c. rights and obligations, completeness, accuracy, classification
d. classification, value and allocation, existence, and rights and obligations

Question 15

In regard to an organisation’s IT governance, management should take responsibility in which key areas:

(i) agenda setting for IT integration into the overall business strategy.
(ii) ensuring an appropriate level of investment in IT business capability.
(iii) successful operational use of IT in routine business activity.
a. (i) only
b. (i) (ii) only
c. (i) (iii) only
d. (i) (ii) (iii)

Answer 15

In regard to an organisation’s IT governance, management should take responsibility in which key areas:

(i) agenda setting for IT integration into the overall business strategy.
(ii) ensuring an appropriate level of investment in IT business capability.
(iii) successful operational use of IT in routine business activity.
a. (i) only
b. (i) (ii) only
c. (i) (iii) only

*d. (i) (ii) (iii)

Question 16

Why organisations use COSO and COBIT in tandem?

a. Organisations use COSO and COBIT in tandem – COSO for their financial framework and COBIT for their IT control framework.
b. Organisations use COSO and COBIT in tandem – COSO for their IT control framework and COBIT for their financial framework.
c. Organisations use COSO and COBIT in tandem – COSO for their corporate governance framework and COBIT for their management control framework.
d. Organisations do NOT use COSO and COBIT in tandem.

Answer 16

Why organisations use COSO and COBIT in tandem?

*a. Organisations use COSO and COBIT in tandem – COSO for their financial framework and COBIT for their IT control framework.

b. Organisations use COSO and COBIT in tandem – COSO for their IT control framework and COBIT for their financial framework.
c. Organisations use COSO and COBIT in tandem – COSO for their corporate governance framework and COBIT for their management control framework.
d. Organisations do NOT use COSO and COBIT in tandem.

Question 17

Corporate governance is:

a. an internal control tool.
b. a factor influencing internal control.
c. a substitute for internal control.
d. part of the control environment.

Answer 17

Corporate governance is:

a. an internal control tool.

b. a factor influencing internal control.

c. a substitute for internal control.
d. part of the control environment.

Question 18

Protecting the IT resources, ensuring the reliable and continuous operations and developing a disaster recovery plan are all aspects of:

a. IT governance.
b. corporate governance.
c. managing risk.
d. IT management.

Answer 18

Protecting the IT resources, ensuring the reliable and continuous operations and developing a disaster recovery plan are all aspects of:

*a. IT governance.

b. corporate governance.
c. managing risk.
d. IT management.

Question 19

If sales have not been entered into the Accounting Information System, this is an example of which type of transaction risk?

a. occurrence
b. completeness
c. accuracy
d. cut-off

Answer 19

If sales have not been entered into the Accounting Information System, this is an example of which type of transaction risk?

a. occurrence

*b. completeness

c. accuracy
d. cut-off

Question 20

The OECD’s definition of corporate governance has specifically outlined the relationships between:

a. a company, its customers and its suppliers.
b. a company’s management, its board, its employees and its suppliers.
c. a company’s management, its board, its shareholders and other stakeholders.
d. a company and various government agencies.

Answer 20

The OECD’s definition of corporate governance has specifically outlined the relationships between:

a. a company, its customers and its suppliers.
b. a company’s management, its board, its employees and its suppliers.

*c. a company’s management, its board, its shareholders and other stakeholders.

d. a company and various government agencies.

Question 21

In relation to corporate governance principles, remunerate fairly and responsibly means:

a. all board members should be paid the same amount of remuneration.
b. all employees of an organisation should be paid fairly.
c. the organisation should be able to demonstrate a clear link between company performance and executive remuneration.
d. the organisation should be able to demonstrate a clear link between employee performance and employee remuneration.

Answer 21

In relation to corporate governance principles, remunerate fairly and responsibly means:

a. all board members should be paid the same amount of remuneration.
b. all employees of an organisation should be paid fairly.

*c. the organisation should be able to demonstrate a clear link between company performance and executive remuneration.

d. the organisation should be able to demonstrate a clear link between employee performance and employee remuneration.

Question 22

Which of the following is not one of the four COSO principles relating to risk assessment?

a. The organisation considers the potential for fraud in assessing risks to the achievement of objectives.
b. The organisation identifies and assesses changes that could significantly impact the system of internal control.
c. The organisation identifies risks to the achievement of its objectives across the entity and analyses risks as a basis for determining how the risks should be managed.
d. The organisation communicates with external parties regarding matters affecting the functioning of other components of internal control.

Answer 22

Which of the following is not one of the four COSO principles relating to risk assessment?

a. The organisation considers the potential for fraud in assessing risks to the achievement of objectives.
b. The organisation identifies and assesses changes that could significantly impact the system of internal control.
c. The organisation identifies risks to the achievement of its objectives across the entity and analyses risks as a basis for determining how the risks should be managed.

*d. The organisation communicates with external parties regarding matters affecting the functioning of other components of internal control.

Question 23

Answer 23

Question 24

Answer 24

Question 25

In Australia, it is recommended that the board is made up of:

a. full-time employees of the company.
b. a mixture of executive and independent directors.
c. CEO plus external directors who are not involved in the business.
d. accountants, auditors and executive director.

Answer 25

In Australia, it is recommended that the board is made up of:

a. full-time employees of the company.

*b. a mixture of executive and independent directors.

c. CEO plus external directors who are not involved in the business.
d. accountants, auditors and executive director.

Question 26

Into which stage would providing backup and disaster recovery procedures fit?

a. COBIT stage Acquiring
b. COBIT stage Delivering
c. COSO stage Control Environment
d. COSO stage Monitoring

Answer 26

Into which stage would providing backup and disaster recovery procedures fit?

a. COBIT stage Acquiring

*b. COBIT stage Delivering

c. COSO stage Control Environment
d. COSO stage Monitoring

Question 27

Which one of the following is an underlying concept of both COSO and COBIT 5?

a. Integration of IT into corporate governance is an underlying concept of both frameworks.
b. Maximisation of the trust in, and value from, enterprise information and technology is an underlying concept of both frameworks.
c. Providing a systemic approach and common vocabulary for addressing today’s most challenging aspects of meeting enterprise performance goals in an underlying concept of both frameworks.
d. Assisting the organisation to get the most value from its critical assets is an underlying concept of both frameworks.

Answer 27

Which one of the following is an underlying concept of both COSO and COBIT 5?

*a. Integration of IT into corporate governance is an underlying concept of both frameworks.

b. Maximisation of the trust in, and value from, enterprise information and technology is an underlying concept of both frameworks.
c. Providing a systemic approach and common vocabulary for addressing today’s most challenging aspects of meeting enterprise performance goals in an underlying concept of both frameworks.
d. Assisting the organisation to get the most value from its critical assets is an underlying concept of both frameworks.

Question 28

Answer 28

Question 29

Which of the following principle is not part of the principles for corporate governance identified by the ASX Corporate Governance Council?

a. Respect the rights of shareholders.
b. Keep disclosure of business information to a minimum.
c. Safeguard integrity in financial reporting.
d. Structure the board to add value.

Answer 29

Which of the following principle is not part of the principles for corporate governance identified by the ASX Corporate Governance Council?

a. Respect the rights of shareholders.

*b. Keep disclosure of business information to a minimum.

c. Safeguard integrity in financial reporting.
d. Structure the board to add value.

Question 30

Which of the following is not one of the three principles that COSO framework has established in association with information and communication?

a. The organisation internally communicates information, including objectives and responsibilities for internal control, necessary to support the functioning of other components of internal control.
b. The organisation communicates with external parties regarding matters affecting the functioning of other components of internal control.
c. The organisation obtains or generates and uses relevant, quality information to support the functioning of other components of internal control.
d. The organisation evaluates and communicates internal control deficiencies in a timely manner to those parties responsible for taking corrective action, including senior management and the board of directors, as appropriate.

Answer 30

Which of the following is not one of the three principles that COSO framework has established in association with information and communication?

a. The organisation internally communicates information, including objectives and responsibilities for internal control, necessary to support the functioning of other components of internal control.
b. The organisation communicates with external parties regarding matters affecting the functioning of other components of internal control.
c. The organisation obtains or generates and uses relevant, quality information to support the functioning of other components of internal control.

*d. The organisation evaluates and communicates internal control deficiencies in a timely manner to those parties responsible for taking corrective action, including senior management and the board of directors, as appropriate.

Question 31

Answer 31

Question 32

Which of the following is not one of the five COSO principles for the control environment?

a. The organisation demonstrates a commitment to integrity and ethical values.
b. The organisation holds individuals accountable for their internal control responsibilities in the pursuit of objectives.
c. The board of directors demonstrates independence from management and exercises oversight of the development and performance of internal control.
d. The organisation identifies risks to the achievement of its objectives across the entity and analyses risks as a basis for determining how the risks should be managed.

Answer 32

Which of the following is not one of the five COSO principles for the control environment?

a. The organisation demonstrates a commitment to integrity and ethical values.
b. The organisation holds individuals accountable for their internal control responsibilities in the pursuit of objectives.
c. The board of directors demonstrates independence from management and exercises oversight of the development and performance of internal control.

*d. The organisation identifies risks to the achievement of its objectives across the entity and analyses risks as a basis for determining how the risks should be managed.

Question 33

Answer 33

Question 34

What part of an organisation determines corporate governance?

a. Shareholders.
b. Board of directors.
c. Employees.
d. Government.

Answer 34

What part of an organisation determines corporate governance?

a. Shareholders.

*b. Board of directors.

c. Employees.
d. Government.

Question 35

The current eight principles for corporate governance outlined by the ASX Corporate Governance Council do not include:

a. lay solid foundations for management and oversight.
b. structure the board to add value.
c. promote ethical and responsible decision making.
d. respect the rights of customers.

Answer 35

The current eight principles for corporate governance outlined by the ASX Corporate Governance Council do not include:

a. lay solid foundations for management and oversight.
b. structure the board to add value.
c. promote ethical and responsible decision making.

*d. respect the rights of customers.

Question 36

In terms of IT governance, which of the following is most correct:

a. IT governance is a subset of corporate governance.
b. IT governance is only required when developing websites.
c. IT governance is an optional management tool.
d. all of the above.

Answer 36

In terms of IT governance, which of the following is most correct:

*a. IT governance is a subset of corporate governance.

b. IT governance is only required when developing websites.
c. IT governance is an optional management tool.
d. all of the above.

Question 37

The assertion of cut-off would be at risk when:

a. the accounting information system accepts a value that is incorrect (e.g. 122 instead of 22).
b. the accounting information system accepts a fictitious sale.
c. the accounting information system includes a sale for the next financial year in this year’s revenue figure.
d. a revenue item is classified as an expense when entering the transaction.

Answer 37

The assertion of cut-off would be at risk when:

a. the accounting information system accepts a value that is incorrect (e.g. 122 instead of 22).
b. the accounting information system accepts a fictitious sale.

c. the accounting information system includes a sale for the next financial year in this year’s revenue figure.

d. a revenue item is classified as an expense when entering the transaction.

Question 38

Answer 38

Question 39

Organisational decisions about IT infrastructure does NOT necessarily include:

a. what type of processing is required.
b. the location of the processing.
c. the upgradability of the processing.
d. the integration of processing.

Answer 39

Organisational decisions about IT infrastructure does NOT necessarily include:

a. what type of processing is required.
b. the location of the processing.

*c. the upgradability of the processing.

d. the integration of processing.

Question 40

Which of the following is the most important requirement of internal control?

a. effectiveness and efficiency of operations
b. reliability of financial reporting
c. compliance with applicable laws and regulations
d. systems and procedures that help to manage risk and achieve objectives

Answer 40

Which of the following is the most important requirement of internal control?

a. effectiveness and efficiency of operations
b. reliability of financial reporting
c. compliance with applicable laws and regulations

*d. systems and procedures that help to manage risk and achieve objectives

Question 41

Which of the following is the objective(s) of a corporate governance system?

(i) Ensuring security holders and other stakeholders in the investment community can have a meaningful dialogue with the board and management on governance matters.
(ii) Ensuring security holders can factor that information into their decision on how to vote on particular resolutions.
(iii) Ensuring investors can factor important information into their decision on whether or not to invest in the entity’s securities.
a. (ii) only
b. (iii) only
c. (i) (iii) only
d. (i) (ii) (iii)

Answer 41

Which of the following is the objective(s) of a corporate governance system?

(i) Ensuring security holders and other stakeholders in the investment community can have a meaningful dialogue with the board and management on governance matters.
(ii) Ensuring security holders can factor that information into their decision on how to vote on particular resolutions.
(iii) Ensuring investors can factor important information into their decision on whether or not to invest in the entity’s securities.
a. (ii) only
b. (iii) only
c. (i) (iii) only

*d. (i) (ii) (iii)

Question 42

To promote ethical and responsible decision making, an organisation should:

(i) have clearly specified codes of conduct for employees and management.
(ii) have standards for dealing with various organisational stakeholders.
(iii) have procedures to be followed when investigating potential unethical activities within the organisation.
(iv) take legal actions immediately against unethical conducts.
a. (i) only
b. (i) (iii) (iv) only
c. (i) (ii) (iii) only
d. (i) (ii) (iii) (iv)

Answer 42

To promote ethical and responsible decision making, an organisation should:

(i) have clearly specified codes of conduct for employees and management.
(ii) have standards for dealing with various organisational stakeholders.
(iii) have procedures to be followed when investigating potential unethical activities within the organisation.
(iv) take legal actions immediately against unethical conducts.
a. (i) only
b. (i) (iii) (iv) only

*c. (i) (ii) (iii) only

d. (i) (ii) (iii) (iv)

Question 43

What could be the result of poor corporate governance in an organisation?

a. Poor returns on investment for minority shareholders.
b. Bad publicity from environmental groups.
c. Company failure and potential damage to the economy.
d. Managers who are influenced by self-interest rather than the longevity of the company.

Answer 43

What could be the result of poor corporate governance in an organisation?

a. Poor returns on investment for minority shareholders.
b. Bad publicity from environmental groups.

*c. Company failure and potential damage to the economy.

d. Managers who are influenced by self-interest rather than the longevity of the company.

Question 44

The basis that the firm’s information system rests upon is called:

a. IT structure.
b. IT architecture.
c. IT infrastructure.
d. IT foundation.

Answer 44

The basis that the firm’s information system rests upon is called:

a. IT structure.
b. IT architecture.

*c. IT infrastructure.

d. IT foundation.

Question 45

The current eight principles for corporate governance outlined by the ASX Corporate Governance Council do not include:

a. recognise and minimise risk.
b. safeguard integrity in financial reporting.
c. make timely and balanced disclosure.
d. remunerate fairly and responsibly.

Answer 45

The current eight principles for corporate governance outlined by the ASX Corporate Governance Council do not include:

*a. recognise and minimise risk.

b. safeguard integrity in financial reporting.
c. make timely and balanced disclosure.
d. remunerate fairly and responsibly.

Question 46

Answer 46

Question 47

Which financial statement assertion is threatened when the organisation has recorded sales that didn’t take place?

a. Occurrence
b. Completeness
c. Accuracy
d. Classification

Answer 47

Which financial statement assertion is threatened when the organisation has recorded sales that didn’t take place?

a. Occurrence

b. Completeness
c. Accuracy
d. Classification

Question 48

Under the ASX Corporate Governance Principles, entities listed on the Australian Securities Exchange are:

a. required to have a majority of independent directors.
b. not required to have a majority of independent directors.
c. required to ensure 50% of the directors are independent.
d. required to let the stakeholders choose the independent directors.

Answer 48

Under the ASX Corporate Governance Principles, entities listed on the Australian Securities Exchange are:

*a. required to have a majority of independent directors.

b. not required to have a majority of independent directors.
c. required to ensure 50% of the directors are independent.
d. required to let the stakeholders choose the independent directors.

Question 49

Answer 49

Question 50

Answer 50

Question 51

Answer 51

Question 52

The Control Objectives for Information and Related Technology (COBIT) framework has been established by:

a. The American Institute of Certified Public Accountants.
b. The Information Technology Institute.
c. The Information Systems Audit and Control Association.
d. The Committee of Sponsoring Organisations.

Answer 52

The Control Objectives for Information and Related Technology (COBIT) framework has been established by:

a. The American Institute of Certified Public Accountants.
b. The Information Technology Institute.

*c. The Information Systems Audit and Control Association.

d. The Committee of Sponsoring Organisations.

Question 53

The aspect referring to how IT is going to be used in the organisation and will be a general statement or specification about how IT will be positioned and the role it will play in the organisation as it embarks on meeting customer needs is:

a. IT governance.
b. IT principles.
c. IT objectives.
d. IT control.

Answer 53

The aspect referring to how IT is going to be used in the organisation and will be a general statement or specification about how IT will be positioned and the role it will play in the organisation as it embarks on meeting customer needs is:

a. IT governance.

*b. IT principles.

c. IT objectives.
d. IT control.

Question 54

Answer 54

Question 55

The COBIT framework:

a. is locally recognised framework for Australia and New Zealand
b. targets large organisations
c. is a framework for corporate governance
d. is a framework for IT governance

Answer 55

The COBIT framework:

a. is locally recognised framework for Australia and New Zealand
b. targets large organisations
c. is a framework for corporate governance

*d. is a framework for IT governance

Question 56

An internal control system includes the control environment component. This is best described as:

a. the overall attitude of awareness and actions of management to internal control.
b. the environment in which the business operates that it wishes to control to negate any business risks.
c. management’s response to the risks that an organisation faces.
d. the provision of sufficient information to enable employees to effectively operate in their roles.

the monitoring of performance to ensure that the organisation’s control system is still relevant and up to date.

Answer 56

An internal control system includes the control environment component. This is best described as:

a. the overall attitude of awareness and actions of management to internal control.

b. the environment in which the business operates that it wishes to control to negate any business risks.
c. management’s response to the risks that an organisation faces.
d. the provision of sufficient information to enable employees to effectively operate in their roles.

Question 57

Which one of the following internal or external parties are usually involved in monitoring activities?

a. External auditors.
b. Internal auditors.
c. Senior management.
d. All of the above.

Answer 57

Which one of the following internal or external parties are usually involved in monitoring activities?

a. External auditors.
b. Internal auditors.
c. Senior management.

*d. All of the above.

Question 58

Answer 58

Question 59

In which component of the internal control system would you see a concern with hiring and recruitment policies?

a. Control environment
b. Risk assessment
c. Control activities
d. Information and communication
e. Monitoring

Answer 59

In which component of the internal control system would you see a concern with hiring and recruitment policies?

a. Control environment

b. Risk assessment
c. Control activities
d. Information and communication
e. Monitoring

Question 60

Please complete the following sentence by choosing the correct words:

COBIT has evolved from a ________ focus to a framework that integrates ________ processes and functions to build the business capability of organisations.

a. purely audit, IT
b. purely control, IT
c. purely control, Management
d. IT governance, control

Answer 60

Please complete the following sentence by choosing the correct words:

COBIT has evolved from a ________ focus to a framework that integrates ________ processes and functions to build the business capability of organisations.

*a. purely audit, IT

b. purely control, IT
c. purely control, Management
d. IT governance, control

Question 61

In which component of the internal control system would you see a concern with reviewing the existing control system operation?

a. Control environment
b. Risk assessment
c. Control activities
d. Information and communication
e. Monitoring

Answer 61

In which component of the internal control system would you see a concern with reviewing the existing control system operation?

a. Control environment
b. Risk assessment
c. Control activities
d. Information and communication

e. Monitoring

Question 62

Which of the following statements regarding risks for a business is false?

a. Risks can come from both internal and external factors.
b. Risks faced by an organisation will always have consequences for the financial statements.
c. Management needs to be aware of and evaluate the risks that the organisation faces.
d. The risks identified will have varying probabilities of eventuating.

Answer 62

Which of the following statements regarding risks for a business is false?

a. Risks can come from both internal and external factors.

b. Risks faced by an organisation will always have consequences for the financial statements.

c. Management needs to be aware of and evaluate the risks that the organisation faces.
d. The risks identified will have varying probabilities of eventuating.

Question 63

The external audit will provide reasonable assurance that:

a. transactions that occurred have been carried out efficiently and effectively
b. assets and liabilities in the financial statements exist and transactions reported actually occurred
c. assets listed are owned by the organisation and liabilities owed are repaid
d. amounts on the financial statements have been calculated in accordance with company policies

Answer 63

The external audit will provide reasonable assurance that:

a. transactions that occurred have been carried out efficiently and effectively

*b. assets and liabilities in the financial statements exist and transactions reported actually occurred

c. assets listed are owned by the organisation and liabilities owed are repaid
d. amounts on the financial statements have been calculated in accordance with company policies