Midterm 1 - Module 3 (132-145) Flashcards
Which of the following controls would be most effective in assuring that the proper custody of assets in the investing cycle is maintained?
The recorded balances int eh investment subsidiary ledger are periodically compared with the contents of the safe-deposit box by independent personnel
A company holds bearer bonds as short-term investment. Responsibility for custody of these bondes and submission of coupons for periodic interest collections probably should be delegated to the
Treasurer
Which of the following controls would an entity most likely use to assist in satisfying the completeness assertion related to long-term investments?
The internal auditor compares the securities in the bank safe deposit box with recorded investments
Which of the following controls would an entity most likely use in safeguarding against the loss of marketable securities?
An independent turst company that has no direct contact with the employees who have recordkeeping responsibilities has possession of the securities
When there are numerous property and equipment transactions during the year, an auditor who plans to assess control risk at a low level usually performs
Test of controls and limited tests of current year property and equipment transactions
In general, material fraud perpetrated by which of the following are most difficult to detect?
Controller
Which of the following is NOT an accurate statement about ocmmunication of internal control related matters to management on a nonissuer(nonpublic) company?
Previously communicated weaknesses that have not been corrected need not be recommunicated
Which of the following matters would an auditor most likely consider to be a material weakness to be communicated to those charged with governance of an audit client?
Ineffective oversight of financial reporting by those charged with governance
Which of the following statements is correct concerning significant deficiencies in an audit?
An auditor may communicate significant deficiencies during an audit or after the audit’s completion
An auditor’s letter issued on significant decifiences relating to an entity’s internal control observed during a financial statement audit should
Indicate that the audit’s purpose was to report on the financial statements and NOT to express an opinion on internal control
Which of the following statements is correct concerning an auditor’s required communication of significant deficiencies?
An auditor’s report on significant deficiencies should include a restriction on the distribution of the report
Whch of the following statements ic orrect concerning significant deficiencies noted in an audit?
The auditor should separately communicate those significant deficiencies considered to be material weaknesses
Which of the following representations should NOT be included in a report on internal control related matters noted in an audit?
There are no significant deficiencies in the design or operation of internal control
Which of the following statements concerning material weaknesses and significant deficiencies is correct?
Compensating controls may limit the severity of a material weakness or significant deficiency
