Test 2

Question 1

Who has the responsibility to maintain controls

Answer 1

Management

Question 2

What should Internal Controls do

Answer 2

ensure assets and records are safe guarded and generate reliable information for decision making

Question 3

What does the auditor use risk assessment procedures to

Answer 3

obtain understanding of entity’s internal control, identify key controls, recognize types of potential misstatements, design tests

Question 4

Objectives of internal controls

Answer 4

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

Question 5

components of internal control

Answer 5

control environment, entity’s risk assessment process, control activities, information and communication, monitoring activities

Question 6

Control Environment

Answer 6

set of standards, processes, and structures that provide basis for carrying out internal control across the organization

Question 7

Entity’s Risk Assessment Process

Answer 7

process for analyzing risks to achieving the entity’s objectives

Question 8

Control Activities

Answer 8

actions established by policies and procedures to help ensure that management directives to mitigate risk

Question 9

Information and Communication

Answer 9

support achievement of objectives both externally and internally

Question 10

Monitoring Activities

Answer 10

ongoing evaluations