ACCT ch6

True or false: The ERM framework replaces the internal control framework.

False

A policy that "employees at all levels are required to fly coach" is an example of

General authority

Which of the following provides regulatory authority for internal control requirements>

Sarbanes-Oxley Act

Which of the following statements about a procedures manual are true?

The procedures manual should be updated regularly. Periodic reviews should be conducted to ensure that employees are following the procedures outlined in the manual.

Ongoing training programs are essential to the maintenance of high quality personnel

True

Periodic reviews should be conducted to ensure that employees are following the procedures outlined in the manual.

True

Requiring employees to take a two week vacation is an effective internal control procedure because it is more difficult to hide fraud or deceptive activities if an employee is absent from work for an extended period of time.

True

Examples of physical controls include ______.

Unannounced random counts to verify the presence of company-owned equipment keeping accounting records in a fireproof vault

To reduce errors, prenumbered forms should ______.

allow for authorized signatures

Hiring quality employees enhances internal controls because quality employees ______.

are able to rotate jobs are able to perform tasks as expected

When possible, which of the following functions should be performed by separate individuals?

authorization custody of assets recording

When duties are separated ______.

collusion is necessary to commit fraud or theft the work of one employee acts as a check on the work of another employee

Features of a strong internal control system include ______.

compliance with applicable laws and regulations reliable financial reporting safeguarding assets

Features of a strong internal control system include ______.

compliance with applicable laws and regulations safeguarding assets reliable financial reporting

Procedures such as segregation of duties, account reconciliations, and other practices that are designed to safeguard assets and enable an organization to prepare reliable financial statements are identified as ( )( )in the COSO framework.

control activities

Procedures such as segregation of duties, account reconciliations, and other practices that are designed to safeguard assets and enable an organization to prepare reliable financial statements are identified as ______ in the COSO framework.

control activities

Administrative internal controls are concerned with ______.

evaluating performance compliance with public laws compliance with company policies

The ERM framework replaces the internal control framework.

false

Insurance that protects a company from losses caused by employee dishonesty is provided by a(n)

fidelity

Companies may decide to look to the ERM framework both to satisfy their ( ) control needs and to move toward a fuller ( ) management process.

internal risk

Prenumbered forms are used for ______.

invoices checks purchase orders

Requiring employees to take extended vacations enhances internal controls because it ______.

is more difficult to hide irregularities if an employee is absent from work for a period of time

Assessing the quality of a company's internal control over time and taking actions as necessary to ensure it continues to address the risks of the organization are identified as ______ in the COSO framework.

monitoring

An example of separation of duties is ______.

one person approves a sales return and a different person issues credit to the customer

To promote the hiring of employees with high levels of personal integrity, employers should ______.

perform background checks on job applicants seek recommendations from prior employers or educators screen job applicants using feedback from job interviews

In 2004, COSO updated the framework to help entities design and implement effective enterprise-wide approaches to

risk management

Accounting internal controls are concerned with ______.

safeguarding company assets ensuring reliable accounting records

A policy that states "investment decisions are authorized at the division level, while hiring decisions are authorized at the departmental level" is an example of

specific

Ongoing training programs are essential to the maintenance of high quality personnel. True false question.

true