Auditing Exam 2 Chapters 7,8,9,10,11

The three categories of objectives of __________ control are reporting, operations, and compliance.

Internal

The three categories of objectives of internal control are reporting, ____________, and ______________.

Operations, Compliance

Segregation of duties is a __________ control.

Preventive

Policies and procedures that help mitigate the risk that the organization's objectives are not met are called control __________.

Activities

The major difference between control objectives and management assertions is that control objectives ______________.

Are broader in scope

Independence from management and proper oversight of the development and performance of the organization's internal control should be demonstrated by the board of directors and its ____ committee.

Audit

The organizational structure of an organization should be separate responsibilities for ____________ of transactions, record keeping for transactions, and ___________ of assets.

Authorization, Custody

Internal control addresses the achievement of objectives in the following areas EXCEPT __________.

Company Profitability and Growth

The company has one control that requires reconciliations of bank statements and another that requires all cash disbursements to be authorized. This is an example of _______ controls.

Complementary

The difference between control objectives of internal control and management assertions is that__________.

Control objectives relate to operations, compliance, and financial reporting.

A policy requiring the preparation of a monthly bank reconciliation is an example of a ___________ control

Detective

The basic principles of the control environment include all of the following EXCEPT a(n) __________.

Effective Risk Assessment Process

True or false: The COSO definition of internal control emphasizes that internal control is an end in and of itself.

False

The controls that are most relevant to an audit are those that pertain to the ___________.

Reliability of Financial Reporting

The acceptable level of variation in performance relative to the achievement of objectives is called _________.

Risk Tolerance

The rule that management must approve all credit sales over $75,000 is an example of a(n) ___________ authorization.

Specific

The foundation for the other internal control component is __________.

The Control Environment

Due to numerous instances of fraudulent reporting in the 1970s and 1980s, the ___________ Commission was formed to study the issue and make recommendations

Treadway

All organizations under the jurisdiction of the SEC are required to maintain a system of internal control that will provide certain reasonable assurances under The ___________.

Foreign Corrupt Practices Act

The Treadway Commission was formed in response to _____________.

Numerous instances of fraudulent financial reporting.

COSO's definition of internal control emphasizes that is a(n) ____________, or a means to an end.

Process

Two controls that both address the existence of accounts receivable are referred to as ____________.

Redundant