What is the primary purpose of effective internal control in an organization?
a. Achievement of certain organizational goals.
b. Completion of a successful audit for the entity.
c. Shareholder involvement in the company's success.
d. Obtaining profitability and financial strength.
status: correct (1.0)
correct: a
your answer: a
feedback: Correct.
Which of the following is not a major emphasis in the design of effective internal control?
a. Assets are properly protected.
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b. Duties are segregated.
c. Transactions are authorized.
d. Processes are efficient.
status: correct (1.0)
correct: d
your answer: d
feedback: Correct.
One of the major components of an organization's internal control structure includes:
a. audit control risk.
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b. the financial environment.
c. risk assessment.
d. telecommunication equipment.
status: correct (1.0)
correct: c
your answer: c
feedback: Correct.
The control environment includes which of the following?
a. Control activities.
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b. Management philosophy and operating style.
c. Assessing activity level risks.
d. Application level controls.
status: correct (1.0)
correct: b
your answer: b
feedback: Correct.
The PCAOB requires auditors of public companies to perform:
a. an audit on the effectiveness of internal control.
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b. an audit of all related parties.
c. an agreed upon procedures engagement.
d. a review of 8-K filings.
status: correct (1.0)
correct: a
your answer: a
feedback: Correct.
Which one of the following will an audit of a company's internal control include?
a. An engagement to perform internal audit procedures.
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b. Implementation of key financial controls.
c. Concluding on the accuracy of the statements of cash flows.
d. Testing of management's risk assessment procedures.
status: correct (1.0)
correct: d
your answer: d
feedback: Correct.
The payroll department should be responsible for:
a. authorization of new employees.
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b. processing payroll transactions.
c. timekeeping.
d. signing payroll checks.
status: correct (1.0)
correct: b
your answer: b
feedback: Correct.
Which of the following is an example of a type of control that may be tested?
a. Contingent liabilities are disclosed adequately.
b. Property and equipment is classified as a long-term asset.
c. Purchase orders are signed by proper agents and management.
d. An undocumented review of the expense budgets.
status: correct (1.0)
correct: c
your answer: c
feedback: Correct.
Which one of the following is considered adequate documentation in an internal control system?
a. The accounting clerk initials the bank reconciliation.
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b. The mailroom mails commissions checks.
c. Invoices are prepared without sequential numbering.
d. Fixed assets are assigned useful lives at random.
status: correct (1.0)
correct: a
your answer: a
feedback: Correct.
A material weakness in the design of the operation of controls discovered in an audit of internal controls
results in:
a. a management letter.
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b. an unfavorable opinion.
c. the firing of the auditors.
d. adjusting audit journal entries.
status: correct (1.0)
correct: b
your answer: b
feedback: Correct.
