Internal Control

Question 1

An entity’s objectives may be divided into 3 categories?

Answer 1

Reliability of financial reporting, effectiveness and efficiency of operations, and compliance with applicable laws and regulations

Question 2

What are the 5 components of Internal Control?

Answer 2

Control environment, risk assessment, information and communication systems, monitoring, and existing control activities

Question 3

What does the control environment do?

Answer 3

Set the tone of an organization

Question 4

What is an entity’s identification and analysis of risks to achievement of its objectives?

Answer 4

Risk assessment

Question 5

What systems support the identification, capture, and exchange of information in a timely and useful manner?

Answer 5

Information and communication systems

Question 6

What is the process that assesses the quality of internal control performance over time?

Answer 6

Monitoring

Question 7

Establishing and maintaining internal control is a responsibility of?

Answer 7

Management

Question 8

Control activities relevant to an audit include the following procedures?

Answer 8

Prenumbering documents, authorization of transactions, independent checks to maintain asset accountability, documentation, timely and appropriate performance reviews, information processing controls, physical controls for safeguarding assets, and segregation of duties

Question 9

What is the mneumonic for the control activities?

Answer 9

PAID TIPS

Question 10

What are the 2 types of information processing controls?

Answer 10

Application and general

Question 11

What controls apply to the processing of individual transactions?

Answer 11

Application controls

Question 12

What controls apply to the information processing throughout the company?

Answer 12

General controls

Question 13

What are the functions that should not be combined when dealing with segregation of duties?

Answer 13

Authorization, record keeping, and custody of related assets

Question 14

The internal control environment should preventt/detect fraud by? But not?

Answer 14

One person, Collusion and management override

Question 15

What controls are designed to provide reasonable assurance that only valid transactions are recognized, approved, and submitted for processing?

Answer 15

Preventive controls

Question 16

What controls are designed to provide reasonable assurance that errors or irregularities are discovered and corrected on a timely basis?

Answer 16

Detective controls

Question 17

What is the purpose of walkthroughs?

Answer 17

Confirm the auditor’s understanding

Question 18

Documentation may include?

Answer 18

Flowchart, internal control questionnaire or checklists, narrative, and documentation from the client

Question 19

What is an adequate flowchart that shows the origin of each document in the system, its subsequent processing and its final disposition?

Answer 19

System flowcharts

Question 20

What is a flowchart that is initially created to document the logic and existing flow of a computer program?

Answer 20

Program flowcharts

Question 21

What shape in the flowchart is used for decision?

Answer 21

Diamond

Question 22

What consists of a list of questions to be answered by “Yes” or “No” response?

Answer 22

Internal control questionnaire

Question 23

What is a written version of a flowchart?

Answer 23

Narrative

Question 24

What controls are performed by people and are more suitable when judgment and discretion are required?

Answer 24

Manual controls

Question 25

What are manual controls also used for?

Answer 25

Monitoring automated controls

Question 26

What controls are more suitable for high volume or recurring transactions?

Answer 26

Automated controls

Question 27

What are the different groups when speaking abou segregation of duties?

Answer 27

Control group, operators, programmers, analyst, and librarian

Question 28

What is a report on the design and implementation of a service organization’s controls but does not provide assurance on the operating effectiveness of the controls?

Answer 28

Report on Management’s Description of the Service Organization’s System and the Suitability of the Design of Controls(Type 1 Report)

Question 29

What is a report on the design, implementation, and operating effectiveness of a service organization’s controls?

Answer 29

Report on Management’s Description of the Service Organization’s System and the Suitability of the Design and Operating Effectiveness of Controls(Type 2 Report)