SB 6H.1

The auditors' information source for validating the bank reconciliation is typically a(n) bank statement.

cutoff

In a computerized environment, proper separation of duties is ______.

dependent on proper password controls

Suspect items such as checks made out to "bearer" are searched for in the cash ______ journal.

disbursements

Adjusting and correcting entries that result from bank reconciliations are found in the cash ______ journal.

disbursements receipts

When computerized processing is used ______.

errors will result in all similar transactions between processed incorrectly

For cash, ______ is always a relevant assertion in the audit plan.

existence

For cash, ______ is always a relevant assertion in the audit plan. Multiple choice question. existence

existence

Payments are remitted by customers to an external location when a(n) arrangement exists.

lockbox

When a fiduciary receives payments, lists the receipts, deposits the money and sends remittance advices, a(n) arrangement exists.

lockbox

Control activities over cash disbursements are designed to ______.

make it difficult for a fraudster to steal cash detect fraudulent activity if it occurs prevent or detect misappropriations of cash

Because of the nature of cash, auditors ______ need to expand substantive audit procedures to ensure the cash balance is not materially misstated and to identify possible fraudulent activities.

may

Fidelity bonds ______.

may include employee background checks are a type of insurance policy are often recommended by auditors

The accountant who record cash receipts and credits to customer accounts should ______.

never handle the cash

When evaluating tests of controls within an IT environment, auditors need to consider the ______.

possibility of temporary transactions trails potential for increased management supervision potential for errors and frauds

Typical relevant assertions for cash are ______.

presentation and disclosure existence valuation

The cutoff bank statement ______.

qualifies as external evidence helps search for unrecorded liabilities verifies the existence of year-end deposits in transit

Due to the lack of predictability of the cash balance, auditors ______ use substantial analytical procedures to test cash.

rarely

Which of the following is NOT a method of testing the operating effectiveness of controls?

reconciliation

Copies of canceled checks received electronically are sufficient for ______.

reconciling an account

When testing cash, auditors typically ______.

rely exclusively on tests of detail

n many situations an employee initially receives cash and thus has custody. Because this cannot be avoided, good control dictates that ______.

remittance advices should be sent to the controller's office for recording cash should be deposited daily and intact

Regarding bank balances, sending a confirmation request to each bank is ______.

required

Compensating controls include ______.

required vacation investigation of excess computer usage rotation of duties

In a computerized environment, proper separation of duties ______.

requires proper permissions

If the internal control activities over cash are not operating effectively, auditors may need to expand ______.

substantive audit procedures

One important difference in assessing control risk in an IT environment is in identifying ______.

the points in the flow of transactions where misstatements could occur

If a control is missing or ineffective ______.

the risk of material misstatement increases fraud may or may not exist

When companies process payments electronically, the required separation of duties is ______ for companies that write paper checks.

the same as

Cash disbursements are typically authorized by an accounts payable department's assembly of supporting documents which is called a(

voucher

The auditor selects examples of a transaction and traces them from initial receipt to the recording in the accounting records when performing a(n)

walkthrough

Detection risk is set based on the level of and risk of material misstatement.

Blank 1: audit Blank 2: risk

When a material misstatement is not prevented or detected by the client's internal controls or auditors' substantive procedures, has been manifested.

Blank 1: audit Blank 2: risk

The primary document used to test the cash balance in the financial statements is the company's

Blank 1: bank Blank 2: reconciliation

Individuals engaging in fraudulent schemes involving cash often try to conceal their crimes by removing they made payable to themselves or endorsed on the back with their own name.

Blank 1: canceled Blank 2: checks

Restrictions on access to input devices and standard screens and computer prompting are examples of

Blank 1: data Blank 2: entry

Restrictions on access to input devices and standard screens and computer prompting are examples of controls in end-user computing environments

Blank 1: data Blank 2: entry

The company's checkbook is the cash

Blank 1: disbursements or disbursement Blank 2: journa

An insurance policy that covers most kinds of cash embezzlement losses is called a(n)

Blank 1: fidelity Blank 2: bond

Common procedures used in tests of controls are , , inspection, and reperformance.

Blank 1: inquiry Blank 2: observation

For each relevant assertion identified by the auditor, professional standards require auditors to first gain an understanding of the dBlank 1Blank 1 d , Incorrect Unavailable dBlank 2Blank 2 d , Incorrect Unavailable that have been designed to mitigate the risk of material misstatement.

Blank 1: internal Blank 2: controls or control

All the debits to the cash accounts are found in the cash

Blank 1: receipts Blank 2: journal

User entities may outsource specialized data processing to other companies referred to as

Blank 1: service Blank 2: organizations

True or false: When doing a WCGW analysis, the question the auditor should ask is, "Has the client designed and implemented a control that, if operating perfectly, would mitigate the identified risk of material misstatement?"

False

Which of the following statements are correct?

Individuals outside of normal cash operations should prepare bank reconciliations. Someone without access to check-writing should perform the recording function.

Which of the following is NOT a typical end-user computing environment control issue that audit teams must consider?

Separation of programming and operations functions

Which of the following statements are correct?

Tests of controls over cash often support a reduction in control risk. Most audit clients have strong controls over cash.

Which of the following is NOT a data entry control in end-user computing environments?

Transaction logs

True or false: The bank reconciliation is an opportunity for management to monitor the separation of duties between cash receipts and disbursements.

True

Substantive procedures over cash will ______.

always be performed

At the end of each day a copy of the check listing, a report of payments recorded in accountants receivable and a copy of the bank deposit slip should be received by ______.

an independent employee

When auditing the bank reconciliation, the auditor should begin by confirming the balance(s) per ______ for each bank account.

bank

In many situations an employee initially receives cash and thus has custody. Because this cannot be avoided, good control dictates that ______.

cash should be deposited daily and intact remittance advices should be sent to the controller's office for recording

In many situations an employee initially receives cash and thus has custody. Because this cannot be avoided, good control dictates that ______.

checks should be endorsed immediately two people should open the mail

Rotation of assigned tasks, proper supervision, and required vacations are all important

compensating