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    AUD O - Compilation Quiz (Reviewer)

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    Angela Miles Dizon
    The document contains a quiz with multiple choice questions about internal controls and an auditor's consideration of internal controls. Some key points covered include: - An auditor should obtain an understanding of the design, implementation, and operating effectiveness of an entity's internal control system. - Significant deficiencies in an entity's internal controls that are identified by the auditor must be communicated to management. - Internal control is not an end in itself, but rather a means to help an entity achieve its objectives such as reliable financial reporting. - Management is responsible for establishing ethical standards and competence levels within an organization to help ensure effective internal controls.

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    AUD O - Compilation Quiz (Reviewer)

    Uploaded by

    Angela Miles Dizon
    60 views3 pages
    The document contains a quiz with multiple choice questions about internal controls and an auditor's consideration of internal controls. Some key points covered include: - An auditor should obtain an understanding of the design, implementation, and operating effectiveness of an entity's internal control system. - Significant deficiencies in an entity's internal controls that are identified by the auditor must be communicated to management. - Internal control is not an end in itself, but rather a means to help an entity achieve its objectives such as reliable financial reporting. - Management is responsible for establishing ethical standards and competence levels within an organization to help ensure effective internal controls.

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    AUD O_Compilation Quiz (Reviewer)

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    The document contains a quiz with multiple choice questions about internal controls and an auditor's consideration of internal controls. Some key points covered include: - An auditor should obtain an understanding of the design, implementation, and operating effectiveness of an entity's internal control system. - Significant deficiencies in an entity's internal controls that are identified by the auditor must be communicated to management. - Internal control is not an end in itself, but rather a means to help an entity achieve its objectives such as reliable financial reporting. - Management is responsible for establishing ethical standards and competence levels within an organization to help ensure effective internal controls.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    60 views3 pages

    AUD O - Compilation Quiz (Reviewer)

    Uploaded by

    Angela Miles Dizon
    The document contains a quiz with multiple choice questions about internal controls and an auditor's consideration of internal controls. Some key points covered include: - An auditor should obtain an understanding of the design, implementation, and operating effectiveness of an entity's internal control system. - Significant deficiencies in an entity's internal controls that are identified by the auditor must be communicated to management. - Internal control is not an end in itself, but rather a means to help an entity achieve its objectives such as reliable financial reporting. - Management is responsible for establishing ethical standards and competence levels within an organization to help ensure effective internal controls.

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    AUD O – Auditing and Assurance Principles

    QUIZ Compilation (Finals)


    QUIZ 6_Considerartion of Internal Control 
    1. The following people at every level of organization do not accomplish internal control, except;
    A. Auditors and Entity’s Management
    B. Entity’s Staff and Personnel
    C. Committee of Sponsoring Organizations
    D. None of the Choices
    2. First Statement: Internal control system in small business tend to be weak compared to the internal
    control systems of larger entities. These weaknesses, however, can be compensated if the
    owner/manager actively participates in the operations of the business.
    Second Statement: Although external control policies and procedures vary significantly from one
    entity to another.
    A. Both statements are correct
    B. Both statements are wrong
    C. The first statements is correct, and the second statement is wrong
    D. The first statements is wrong, and the second statement is correct
    3. First Statement: Most of the internal controls tend to be directed at non-routine transactions rather
    than routine transactions.
    Second Statement: The effectiveness of internal control may be affected by the inherent limitations.
    A. Both statements are correct
    B. Both statements are wrong
    C. The first statements is correct, and the second statement is wrong
    D. The first statements is wrong, and the second statement is correct
    4. These are the interrelated components of the entity’s internal control, except;
    A. Control Activities
    B. Control Risk
    C. Control Environment
    D. Monitoring
    5. When obtaining understanding of the entities internal control, the auditor should obtain knowledge
    about the systems
    Design; Implementation; Operating Effectiveness
    A. yes; yes; yes
    B. yes; yes; no
    C. yes; no; no
    D. no; no; yes
    6. It is the process of evaluating he design and operating effectiveness of an entity’s internal control as
    to how it detects or prevents material misstatements in the financial statements.
    A. Assessing Control Risk
    B. Determining Acceptable Level of Detection Risk
    C. Assessing Inherent Risk
    D. Setting Desired Level of Audit Risk
    7. Which of the following does an auditor least likely perform in assessing audit risk?
    A. Gather audit evidence in support of record transactions
    B. Obtain an understanding of the client system of internal control
    C. Understand the economic substance of significant transactions completed by the client
    D. Understand the entity in the industry in which it operates
    8. First Statement: Communicating significant deficiencies in internal control orally in the first instance
    to management and those charged with governance, relieves the auditor of their responsibility to
    communicate the significant deficiencies in writing.
    Second Statement: The auditor is required to report to the appropriate level of management and
    those charged with governance any significant deficiencies in the internal control systems which have
    come to the auditor’s attention, but it is not the auditor’s responsibility to obtain for internal control
    weaknesses.
    A. Both statements are correct
    B. Both statements are wrong
    C. The first statements is correct, and the second statement is wrong
    D. The first statements is wrong, and the second statement is correct
    9. Provides a framework for planning, directing, and controlling the entity’s operations.
    A. Organizational Structure
    B. Information Processing
    C. Commitment to competence
    D. Integrity and ethical values
    10.When obtaining an understanding of the accounting and internal systems to plan the audit, the
    auditor should obtain knowledge about the
    Design; operation of accounting and internal control
    A. yes; yes
    B. yes; no
    C. no; no
    D. no; yes
    11. As a result of the auditor’s consideration of the accounting and internal control systems, the auditor
    may become aware of significant deficiencies in the entity’s internal control systems. If it happens, the
    auditor is required:
    A. To communicate it to the CPA
    B. To communicate it to the management of the client
    C. To ignore it because auditors are not required to search for and/or identify internal control
    deficiencies
    D. To communicate it to the public (internet users)
    12. First Statement: One of the inherent limitations that may affect the internal control’s effectiveness is
    the possibility of management supporting the inherent control.
    Second Statement: Assessing the level of control risk comes next year after the auditor has
    determined the desired level of audit and assessed the level of inherent risk.
    A. Both statements are correct
    B. Both statements are wrong
    C. The first statements is correct, and the second statement is wrong
    D. The first statements is wrong, and the second statement is correct
    13. Which of the following statement is incorrect about walk through test?
    A. It involves tracing a few transactions through the accounting system
    B. This procedure may form part of test of control
    C. The nature and extent of walkthrough test performed by the auditor are you such that
    day alone would provide sufficient appropriate audit evidence to support a low
    assessment of control risk
    D. This procedure is performed to determine whether the controls are being implemented
    14.Obtaining knowledge about whether the control is implemented can best be obtained by
    A. Inquiry of client’s personnel
    B. Reading procedures manual
    C. Tracing transactions through the information system relevant to financial reporting
    D. Performing test of control
    15.Communication of internal control weaknesses can be done:
    A. Before the authorization to issue the financial statements is made
    B. Before or after the financial statements authorization to issue
    C. After the issuance of auditor’s report
    D. Before or after the auditor’s report is issued
    16.First Statement: Internal Control is a means of achieving the entity’s objectives – not an end in itself.
    Second Statement: Out of the three categories of the entity’s objectives, Financial Reporting Objective
    is the most relevant to the audit.
    A. Both statements are correct
    B. Both statements are wrong
    C. The first statements is correct, and the second statement is wrong
    D. The first statements is wrong, and the second statement is correct
    17.It includes the attitudes, awareness, and actions of management and those charged with governance
    concerning the entity’s internal control and its importance in the entity.
    A. Risk Assessment
    B. Control Activities
    C. Control Environment
    D. Information and Communication systems
    18.Auditors are required to search for and/or identify internal control deficiencies and to communicate
    these to the client’s management
    FALSE
    19. First Statement: Management should establish ethical standards that discourage employees from
    engaging in dishonest, unethical, or illegal acts that could materially affect the financial statement.
    Second Statement: The entity should consider the level of competence required for each task and
    translate it to requisite knowledge and skills.
    A. Both statements are correct
    B. Both statements are wrong
    C. The first statements is correct, and the second statement is wrong
    D. The first statements is wrong, and the second statement is correct
    20.The auditor may communicate internal control deficiencies orally to the management and to the
    board of directors, when appropriate, to assist them in taking remedial action to minimize the risks of
    material misstatement
    TRUE

    QUIZ 7_ Auditing in a Computerized Environment 

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