Day 22

Question 1

Identify the Internal Control Component: Authorization of transactions

Answer 1

Existing Control Activities

TBS-006010

Question 2

Identify the Internal Control Component: Participation of those charged with governance

Answer 2

Control Environment

TBS-006010

Question 3

Identify the Internal Control Component: Internal audit function

Answer 3

Monitoring

TBS-006010

Question 4

Identify the Internal Control Component: Assignment of authority, responsibility, and accountability

Answer 4

Control Environment

TBS-006010

Question 5

Identify the Internal Control Component: Adoption of new accounting principles

Answer 5

Risk assessment

TBS-006010

Question 6

Identify the Internal Control Component: Proper presentation of transactions and related disclosures

Answer 6

Information and communication systems

TBS-006010

Question 7

Identify the Internal Control Component: New personnel

Answer 7

Risk assessment - creates a risk that needs to be identified and evaluated as part of the organization’s risk assessment

TBS-006010

Question 8

Identify the Internal Control Component: Segregation of duties

Answer 8

Existing control activities

TBS-006010

Question 9

Identify the Internal Control Component: Human resource policies and practices

Answer 9

Control environment

TBS-006010

Question 10

Identify the Internal Control Component: Incorporation of new technology

Answer 10

Risk Assessment

TBS-006010

Question 11

Identify the Internal Control Component: Pre-numbering of documents

Answer 11

Existing control activities

TBS-006010

Question 12

Identify the Internal Control Component: Measurement and recording of proper monetary values

Answer 12

Info & Communication systems - used to measure and record transactions at their proper value

TBS-006010

Question 13

Identify the Internal Control Component: The way in which significant events are captured by the account system

Answer 13

Info & Communication Systems

TBS-006010

Question 14

Identify the Internal Control Component: Operating performance reviews

Answer 14

Existing Control Activities

TBS-006010

Question 15

Identify the Internal Control Component: Corporate Restructuring

Answer 15

Risk Assessment

TBS-006010

Question 16

Equation: Mean-per-Unit Estimation point estimate

Answer 16

Mean-per-Unit estimation = Average Audited Value × Number of items in Population

TBS-765700

Question 17

Equation: Ratio Estimation point estimate

Answer 17

Ratio Estimation = (Audited Value of Sample / Book Value of Sample) × Total Book Value

TBS-765700

Question 18

Equation: Difference Estimation point estimate

Answer 18

Step 1: Calculate Projected Error = [(Book Value of Sample – Audited Value of Sample) / Number of Items Audited] × Population of Items

Step 2: Calculate Point Estimate = Total Book Value of Population – Projected Error

TBS-765700

Question 19

Opinion Type: (Internal Controls Audit) The auditors concluded that the ineffectiveness of the design of controls over AP and Cash Disbursements represent a material weakness in Internal Control even though the FS are not materially misstated.

Answer 19

A Material Weakness in Internal Controls = Adverse Opinion on the Internal Controls

TBS-010011

Question 20

Opinion Type: (Internal Controls Audit) Mgmt has not provided assurance that there are no material weaknesses in controls. Subsequent tests revealed no material weaknesses exist.

Answer 20

In an Internal Control Audit, Mgmt is required to provide an assertion about the effectiveness of Internal Controls. However, an Unqualified Opinion is issued if the auditor does NOT find any Material Weaknesses

TBS-010011

Question 21

Equation: Inventory Turnover

Answer 21

Inventory turnover = COGS / Average Inventory

MCQ-02628

Question 22

For effective internal control, the AP dept should compare the information on each Vendor’s Invoice with:

Answer 22

Receiving Report and the Purchase Order

MCQ-03169