02 Jan general controls

Question 1. Question :

(TCO 5) Which of the following is responsible for establishing internal controls for a public company?

Management

Financial statement auditors

Management and auditors

Committee of Sponsoring Organizations

Question 2. Question :

(TCO 5) Sarbanes-Oxley requires management to issue an internal control report that includes two specific items. Which of the following is one of these two requirements?

A statement that management is responsible for establishing and maintaining an adequate internal control structure and procedures for financial reporting

A statement that management and the board of directors are jointly responsible for establishing and maintaining an adequate internal control structure and procedures for financial reporting

A statement that management, the board of directors, and the external auditors are jointly responsible for establishing and maintaining an adequate internal control structure and procedures for financial reporting

None of the above

Question 3. Question :

(TCO 5) Which of the following activities would be least likely to strengthen a company’s internal control?

Separating accounting from other financial operations

Maintaining insurance for fire and theft

Fixing responsibility for the performance of employee duties

Carefully selecting and training employees

Question 4. Question :

(TCO 5) Internal controls can never be regarded as completely effective. Even if company personnel could design an ideal system, its effectiveness depends on the

adequacy of the computer system.

proper implementation by management.

ability of the internal audit staff to maintain it.

competency and dependability of the people using it.

Question 5. Question :

(TCO 5) Which of the following is not one of the levels of an absence of internal controls?

Major deficiency

Material weakness

Significant deficiency

Control deficiency

Question 6. Question :

(TCO 10) Which of the following is not a benefit of using IT-based controls?

Ability to process large volumes of transactions

Ability to replace manual controls with computer-based controls

Reduction in misstatements due to consistent processing of transactions

Over-reliance on computer-generated reports

Question 7. Question :

(TCO 10) Programmers should do all but which of the following?

Test programs for proper performance

Evaluate legitimacy of transaction data input

Develop flowcharts for new applications

Programmers should perform each of the above

Question 8. Question :

(TCO 10) Which of the following is least likely to be used in obtaining an understanding of client general controls?

Examination of system documentation

Inquiry of client personnel (e.g. key users)

Observation of transaction processing

Reviews of questionnaires completed by client IT personnel

Question 9. Question :

(TCO 10) Auditors should evaluate the _____ before evaluating application controls because of the potential for pervasive effects.

input controls

control environment

processing controls

general controls

Question 10. Question :

(TCO 10) Which of the following is not a category of an application control?

Processing controls

Output controls

Hardware controls

Input controls