Question 1

List and describe the control activities for mitigating financial, operational, and compliance controls risks.

Accepted Answer

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Question 2

Application controls ensure completeness and accuracy of transaction processing, authorization, and validity.

Accepted Answer

Application controls are designed to ensure completeness and accuracy of transaction processing, authorization, and validity.

Question 3

What is internal control and what is its purpose?

Accepted Answer

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Question 4

In the COSO Internal Control-Integrated Framework, risk assessment objectives include all of the following EXCEPT

Accepted Answer

The COSO framework's risk assessment objectives focus on identifying and analyzing risks related to financial reporting and fraud, not specifically on the risks of financial controls themselves.

Question 5

Input controls ensure data is processed properly.

Accepted Answer

Input controls ensure that data is entered correctly and accurately into a system, but they do not directly ensure that data is processed properly. Processing is a separate step that involves transforming input data into a desired output.

Question 6

In control activities, ________ ensure appropriate information processing, authorization, and data integrity.

Accepted Answer

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Question 7

IT general controls have a pervasive effect on all internal controls.

Accepted Answer

IT general controls provide the foundation for all internal controls related to IT systems and processes. Therefore, they have a pervasive effect on all internal controls.

Question 8

Which of the following is NOT the purpose of internal controls?

Accepted Answer

Internal controls are designed to ensure compliance with laws and regulations, promote effectiveness and efficiency of operations, and ensure the reliability of financial reporting. Public examination of private data is not a purpose of internal controls.

Question 9

Which COSO Internal Control-Integrated Framework essential component of an effective internal control system involves assessing internal controls as well as the process for taking corrective action?

Accepted Answer

Monitoring is the essential component of the COSO Internal Control-Integrated Framework that involves assessing internal controls as well as the process for taking corrective action. Monitoring ensures that the system of internal control continues to operate effectively over time. It involves ongoing evaluations of the system of internal control, including the performance of controls and the effectiveness of control activities. The monitoring process includes assessing the design and implementation of controls and evaluating their operating effectiveness, as well as investigating and correcting any identified control deficiencies.

Question 10

Which COSO Internal Control-Integrated Framework essential component of an effective internal control system involves identifying, analyzing, and managing risks that affect a company's ability to record, process, summarize, and report financial data properly?

Accepted Answer

The essential component of an effective internal control system that involves identifying, analyzing, and managing risks that affect a company's ability to record, process, summarize, and report financial data properly is called Risk Assessment. The other components are Control Environment, Control Activities, and Monitoring.

Question 11

Which COSO Internal Control-Integrated Framework essential component of an effective internal control system includes the accounting system for identifying, recording, processing, and reporting transactions and financial data?

Accepted Answer

Information and Communication is the essential component of an effective internal control system that includes the accounting system for identifying, recording, processing, and reporting transactions and financial data. This component ensures that information is captured and communicated to appropriate parties in a timely and accurate manner.

Question 12

What are the five major categories of internal control?

Accepted Answer

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Question 13

What are the objectives of internal control?

Accepted Answer

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Question 14

Internal control is a set of policies, procedures, and activities to achieve an enterprise's objectives that are related to what?

Accepted Answer

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Question 15

For internal control to be effective what two things does an enterprise need?

Accepted Answer

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Question 16

Increasingly the expectation is that the auditor and the IT professional learn more about the other's field.

Accepted Answer

As technology continues to play a larger role in auditing, there is a growing need for auditors to have more knowledge and understanding of IT systems, and for IT professionals to comprehend the requirements of auditing and internal controls. Therefore, the expectation is that both the auditor and the IT professional learn more about each other's field.

Question 17

In the COSO Internal Control-Integrated Framework, control activities do NOT include

Accepted Answer

Management controls are not included in control activities in the COSO Internal Control-Integrated Framework, as they are a separate component of the framework. Control activities include independent reconciliations of assets and accounting records, physical controls, and segregation of duties.

Question 18

Processing controls ensure reports and other output are distributed properly.

Accepted Answer

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Question 19

Internal controls for the accounting system are incomplete without IT controls.

Accepted Answer

IT controls are an essential part of internal controls for the accounting system. IT controls ensure the reliability, accuracy, and security of financial information and prevent unauthorized access and fraud. Without IT controls, the accounting system's internal controls would be incomplete and susceptible to errors, omissions, and fraudulent activities. Therefore, organizations must establish and maintain effective IT controls to complement their traditional internal controls for the accounting system.

Question 20

What factors are part of the control environment?

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Quiz 10: Fraud and Internal Control