chap 11
5) Which of the following describes the process of implementing a new system in one part of the organization, while other locations continue to use the current system? A) parallel testing B) online testing C) pilot testing D) control testing Answer
C
33) In IT systems, if general controls are effective, it increases the auditor's ability to rely on application controls to reduce control risk. Answer
TRUE
34) Parallel testing can be used in combination with pilot testing to test new systems. Answer
TRUE
36) Backup and contingency plans should also identify alternative hardware that can be used to process company data. Answer
TRUE
37) A large portion of errors in IT systems result from data entry errors. Answer
TRUE
39) Processing controls are a category of application controls. Answer
TRUE
40) Controls that relate to a specific use of the IT system, such as the processing of sales or cash receipts, are called application controls. Answer
TRUE
6) Management has a legal and professional responsibility to be sure that the financial statements are prepared in accordance with reporting requirements of applicable accounting frameworks. Answer
TRUE
9) Firewalls can protect company data and software programs. Answer
TRUE
9) Other countries around the world have passed similar legislation to the Sarbanes-Oxley Act regarding mandating management and auditor reporting on internal controls over financial reporting. Answer
TRUE
14) Which of the following is not an example of an applications control? A) Back-up of data is made to a remote site for data security. B) There is a preprocessing authorization of the sales transactions. C) There are reasonableness tests for the unit selling price of a sale. D) After processing, all sales transactions are reviewed by the sales department. Answer
A
1) A database management system A) allows clients to create databases that include information that can be shared across multiple applications. B) stores data on different files for different purposes, but always knows where they are and how to retrieve them. C) allows quick retrieval of data, but at a cost of inefficient use of file space. D) allows quick retrieval of data, but it needs to update files continually. Answer
A
1) Who is responsible for establishing a private company's internal control? A) senior management B) internal auditors C) FASB D) audit committee Answer
A
11) In performing the audit of internal control over financial reporting, the auditor emphasizes internal control over classes of transactions because A) the accuracy of accounting system outputs depends heavily on the accuracy of inputs and processing. B) the class of transaction is where most fraud schemes occur. C) account balances are less important to the auditor then the changes in the account balances. D) classes of transactions tests are the most efficient manner to compensate for inherent risk. Answer
A
11) Output controls need to be designed for which of the following data integrity objectives? A) detecting errors after the processing is completed B) preventing errors before the processing is completed C) detecting errors in the general ledger adjustment process D) preventing errors in separation of duties for IT personnel Answer
A
12) A control that relates to all parts of the IT system is called a(n) A) general control. B) systems control. C) universal control. D) applications control. Answer
A
3) The PCAOB places responsibility for the reliability of internal controls over the financial reporting process on A) the company's board of directors. B) the audit committee of the board of directors. C) management. D) the CFO and the independent auditors. Answer
C
15) The Sarbanes-Oxley Act requires A) all public companies to issue reports on internal controls. B) all public companies to define adequate internal controls. C) the auditor of public companies to design effective internal controls. D) the auditor of public companies to withdraw from an engagement if internal controls are weak. Answer
A
15) Which of the following is not a general control? A) Computer performed validation tests of input accuracy. B) Equipment failure causes error messages on monitor. C) There is a separation of duties between programmer and operators. D) There are adequate program run instructions for operating the computer. Answer
A
16) Which of the following is an accurate statement regarding the auditor's responsibility for understanding internal control? A) Transaction-related audit objectives typically have no impact on the rights and obligations objectives. B) Transaction-related audit objectives typically have a significant impact on the balance-related audit objective of realizable value. C) Auditors generally emphasize internal control over account balances rather than classes of transactions. D) Auditors and management are both equally concerned about controls that affect the efficiency and effectiveness of company operations. Answer
A
17) Controls which are designed to assure that the information entered into the computer is authorized, complete, and accurate are called A) input controls. B) processing controls. C) output controls. D) general controls. Answer
A
17) The primary emphasis by auditors is on controls over A) classes of transactions. B) account balances. C) both A and B, because they are equally important. D) both A and B, because they vary from client to client. Answer
A
19) Reasonable assurance allows for A) low likelihood that material misstatements will not be prevented or detected by internal controls. B) no likelihood that material misstatements will not be prevented or detected by internal control. C) moderate likelihood that material misstatements will not be prevented or detected by internal control. D) high likelihood that material misstatements will not be prevented or detected by internal control. Answer
A
2) When auditing a client who uses a database management system, the auditor is principally aware of elevated risk due to the fact that A) multiple users can access and update data files. B) the accounting information is only in one place. C) the database administrator may lack appropriate accounting knowledge. D) multiple users could all access the data simultaneously causing a system shutdown. Answer
A
2) Which of the following components of the control environment define the existing lines of responsibility and authority? A) organizational structure B) management philosophy and operating style C) human resource policies and practices D) management integrity and ethical values Answer
A
20) Which of the following is most correct regarding the requirements under Section 404 of the Sarbanes-Oxley Act? A) The audits of internal control and the financial statements provide reasonable assurance as to misstatements. B) The audit of internal control provides absolute assurance of misstatement. C) The audit of financial statements provides absolute assurance of misstatement. D) The audits of internal control and the financial statements provide absolute assurance as to misstatements. Answer
A
21) To obtain an understanding of an entity's control environment, an auditor should concentrate on the substance of management's policies and procedures rather than their form because A) management may establish appropriate policies and procedures but not act on them. B) the board of directors may not be aware of management's attitude toward the control environment. C) the auditor may believe that the policies and procedures are inappropriate for that particular entity. D) the policies and procedures may be so weak that no reliance is contemplated by the auditor. Answer
A
3) Which of the following factors may increase risks to an organization? A) Geographic dispersion of company operations Presence of new information technologies Yes Yes B) No No C) Yes No D) No Yes
A
4) Internal controls are not designed to provide reasonable assurance that A) all frauds will be detected. B) transactions are executed in accordance with management's authorization. C) the company's resources are used efficiently and effectively. D) company personnel comply with applicable rules and regulations. Answer
A
4) What tools do companies use to limit access to sensitive company data? A) Encryption techniques Digital signatures Firewall Yes Yes Yes B) Yes No No C) No Yes Yes D) Yes Yes No
A
4) Which of the following parties provides an assessment of the effectiveness of internal control over financial reporting for public companies? A) Management Financial statement auditors Yes Yes B) Management Financial statement auditors No No C) Management Financial statement auditors Yes No D) Management Financial statement auditors No Yes
A
5) An act of two or more employees to steal assets and cover their theft by misstating the accounting records would be referred to as A) collusion. B) a material weakness. C) a control deficiency. D) a significant deficiency. Answer
A
6) 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) a statement that management is responsible for establishing and maintaining an adequate internal control structure and procedures for financial reporting B) 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 C) 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 D) a statement that the external auditors are solely responsible for establishing and maintaining an adequate system of internal control Answer
A
6) When the auditor is obtaining an understanding of the independent computer service center's internal controls, the auditor should A) use the same criteria used to evaluate the client's internal controls. B) use different criteria because the service center resides outside the company. C) use the same criteria used to evaluate the client's internal controls but omit tests of transactions. D) use different criteria for the service center by including substantive tests of balances. Answer
A
1) Which of the following activities would be least likely to strengthen a company's internal control? A) separating accounting from other financial operations B) maintaining insurance for fire and theft C) fixing responsibility for the performance of employee duties D) carefully selecting and training employees Answer
B
11) Which of the following is not an underlying principle related to risk assessment? A) The organization should have clear objectives in order to be able to identify and assess the risks relating to the objectives. B) The auditors should determine how the company's risks should be managed. C) The organization should consider the potential for fraudulent behavior. D) The organization should monitor changes that could impact internal controls. Answer
B
13) It is important for the CPA to consider the competence of the clients' personnel because their competence has a direct impact upon the A) cost/benefit relationship of the system of internal control. B) achievement of the objectives of internal control. C) comparison of recorded accountability with assets. D) timing of the tests to be performed. Answer
B
13) When considering internal controls, A) auditors can ignore controls affecting internal management information. B) auditors are concerned with the client's internal controls over the safeguarding of assets if they affect the financial statements. C) management is responsible for understanding and testing internal control over financial reporting. D) companies must use the COSO framework to establish internal controls. Answer
B
14) Proper segregation of functional responsibilities calls for separation of A) authorization, execution, and payment. B) authorization, recording, and custody. C) custody, execution, and reporting. D) authorization, payment, and recording. Answer
B
2) With which of management's assertions with respect to implementing internal controls is the auditor primarily concerned? A) efficiency of operations B) reliability of financial reporting C) effectiveness of operations D) compliance with applicable laws and regulations Answer
B
23) Which of the following best explains the relationship between general controls and application controls? A) Application controls are effective even if general controls are extremely weak. B) Application controls are likely to be effective only when general controls are effective. C) General controls have no impact on application controls. D) None of the above. Answer
B
24) A(n) ________ total represents the summary total of codes from all records in a batch that do not represent a meaningful total. A) record B) hash C) output D) financial Answer
B
26) If a control total were to be computed on each of the following data items, which would best be identified as a hash total for a payroll IT application? A) gross wages earned B) employee numbers C) total hours worked D) total debit amounts and total credit amounts Answer
B
3) Internal controls A) are implemented by and are the responsibility of the auditors. B) consist of policies and procedures designed to provide reasonable assurance that the company achieves its objectives and goals. C) guarantee that the company complies with all laws and regulations. D) only apply to SEC companies. Answer
B
30) The most important output control is A) distribution control, which assures that only authorized personnel receive the reports generated by the system. B) review of data for reasonableness by someone who knows what the output should look like. C) control totals, which are used to verify that the computer's results are correct. D) logic tests, which verify that no mistakes were made in processing. Answer
B
4) Which of the following statements is most correct with respect to separation of duties? A) A person who has temporary or permanent custody of an asset should account for that asset. B) Employees who authorize transactions should not have custody of the related assets. C) Employees who open cash receipts should record the amounts in the subsidiary ledgers. D) Employees who authorize transactions should have recording responsibility for these transactions. Answer
B
5) Authorizations can be either general or specific. Which of the following is not an example of a general authorization? A) automatic reorder points for raw materials inventory B) a sales manager's authorization for a sales return C) credit limits for various classes of customers D) a sales price list for merchandise Answer
B
5) Rather than maintain an internal IT center, many companies outsource their basic IT functions such as payroll to an A) external general service provider. B) independent computer service center. C) internal control service provider. D) internal auditor. Answer
B
8) Which of the following deals with ongoing or periodic assessment of the quality of internal control by management? A) verifying activities B) monitoring activities C) oversight activities D) management activities Answer
B
9) The auditor's primary purpose in auditing the client's system of internal control over financial reporting is A) to prevent fraudulent financial statements from being issued to the public. B) to evaluate the effectiveness of the company's internal controls over all relevant assertions in the financial statements. C) to report to management that the internal controls are effective in preventing misstatements from appearing on the financial statements. D) to efficiently conduct the Audit of Financial Statements. Answer
B
10) The internal control framework used by most U.S. companies is the ________ framework. A) FASB B) PCAOB C) COSO D) SEC Answer
C
10) When purchasing software or developing in-house software, A) cost should be the only factor. B) extensive testing of the software is generally not required. C) a team of both IT and non-IT personnel should be involved in the decision process. D) the librarian and the IT manager should be the only ones involved in the decision process. Answer
C
10) Which of the following is a risk assessment principle? A) accountability B) use relevant, quality information to support the functioning of internal controls C) consider the potential for fraud D) develop general controls over technology Answer
C
12) Which of the following is not one of the subcomponents of the control environment? A) management's philosophy and operating style B) organizational structure C) adequate separation of duties D) commitment to competence Answer
C
15) Without an effective ________, the other components of the COSO framework are unlikely to result in effective internal control, regardless of their quality. A) risk assessment policy B) monitoring policy C) control environment D) system of control activities Answer
C
16) Controls which are built in by the manufacturer to detect equipment failure are called A) input controls. B) data integrity controls. C) hardware controls. D) manufacturer's controls. Answer
C
17) If a company has an effective internal audit department, A) the internal auditors can express an opinion on the fairness of the financial statements. B) their work cannot be used by the external auditors per PCAOB Standard 5. C) it can reduce external audit costs by providing direct assistance to the external auditors. D) the internal auditors must be CPAs in order for the external auditors to rely on their work. Answer
C
18) An auditor should consider two key issues when obtaining an understanding of a client's internal controls. These issues are A) the effectiveness and efficiency of the controls. B) the frequency and effectiveness of the controls. C) the design and operating effectiveness of the controls. D) the implementation and operating effectiveness of the controls. Answer
C
19) Which of the following tests determines that every field in a record has been completed? A) validation B) sequence C) completeness D) programming Answer
C
2) Two key concepts that underlie management's design and implementation of internal control are A) costs and materiality. B) absolute assurance and costs. C) inherent limitations and reasonable assurance. D) collusion and materiality. Answer
C
2) Which of the following is a component of general controls? A) processing controls B) output controls C) back-up and contingency planning D) input controls Answer
C
20) An example of a physical control is A) a hash total. B) a parallel test. C) the matching of employee fingerprints to a database before access to the system is allowed. D) the use of backup generators to prevent data loss during power outages. Answer
C
22) An internal control deficiency occurs when computer personnel A) participate in computer software acquisition decisions. B) design flowcharts and narratives for computerized systems. C) originate changes in customer master files. D) provide physical security over program files. Answer
C
25) In an IT system, automated equipment controls or hardware controls are designed to A) correct errors in the computer programs. B) monitor and detect errors in source documents. C) detect and control errors arising from the use of equipment. D) arrange data in a logical sequential manner for processing purposes. Answer
C
28) Which of the following is not a general control? A) separation of IT duties B) systems development C) processing controls D) hardware controls Answer
C
29) ________ is the information technology and internal control processes an organization has in place to protect computers, networks, programs, and data from unauthorized access. A) Encryption B) A firewall C) Cybersecurity D) A processing control Answer
C
4) General controls include all of the following except A) systems development. B) online security. C) processing controls. D) hardware controls. Answer
C
6) A ________ is responsible for controlling the use of computer programs, transaction files and other computer records and documentation and releases them to the operators only when authorized. A) software engineer B) chief computer operator C) librarian D) data control operator Answer
C
7) When management is evaluating the design of internal control, management evaluates whether the control can do which of the following? A) Detect material misstatements Correct material misstatements Yes Yes B) Detect material misstatements Correct material misstatements No No C) Detect material misstatements Correct material misstatements Yes No D) Detect material misstatements Correct material misstatements No Yes
C
7) Which of the following best describes the purpose of control activities? A) the actions, policies and procedures that reflect the overall attitudes of management B) the identification and analysis of risks relevant to the preparation of financial statements C) the policies and procedures that help ensure that necessary actions are taken to address risks to the achievement of the entity's objectives D) activities that deal with the ongoing assessment of the quality of internal control by management Answer
C
7) ________ protect(s) the security of electronic communication when information is transmitted and when it is stored. A) Firewalls B) Digital signatures C) Encryption D) A database Answer
C
8) A(n) ________ is a computer resource deployment and procurement model that enables an organization to obtain IT resources and applications from any location via an Internet connection. A) application service provider B) firewall C) cloud computing environment D) local area network Answer
C
8) When one material weakness is present at the end of the year, management of a public company must conclude that internal control over financial reporting is A) insufficient. B) inadequate. C) ineffective. D) inefficient. Answer
C
9) Which of the following controls prevent and detect errors while transaction data are processed? A) software B) application C) processing D) transaction Answer
C
1) Old and new systems operating simultaneously in all locations is a test approach known as A) pilot testing. B) horizontal testing. C) integrative testing. D) parallel testing. Answer
D
1) Which of the following is not one of the three primary objectives of effective internal control? A) reliability of financial reporting B) efficiency and effectiveness of operations C) compliance with laws and regulations D) assurance of elimination of business risk Answer
D
12) Internal controls can never be regarded as completely effective. Even if company personnel could design an ideal system, its effectiveness depends on the A) adequacy of the computer system. B) proper implementation by management. C) ability of the internal audit staff to maintain it. D) competency and dependability of the people using it. Answer
D
13) Controls that are designed for each software application and are intended to help a company satisfy the transaction-related audit objectives are A) user controls. B) general controls. C) audit controls. D) application controls. Answer
D
14) Of the following statements about internal controls, which one is least likely to be correct? A) No one person should be responsible for the custodial responsibility and the recording responsibility for an asset. B) Transactions must be properly authorized before such transactions are processed. C) Because of the cost-benefit relationship, a client may apply controls on a test basis. D) Control procedures reasonably ensure that collusion among employees cannot occur. Answer
D
16) Which of the following is an accurate statement regarding control activities? A) As the level of complexity of IT systems increases, the separation of duties often becomes blurred. B) Segregation of duties would be violated if the same person authorizes the payment of a vendor's invoice and also approves the disbursement of funds to pay the bill. C) The most important type of protective measure for safeguarding assets and records is the use of physical precautions. D) All of the above. Answer
D
18) To promote operational efficiency, the internal audit department would ideally report to A) line management. B) the PCAOB. C) the Chief Accounting Officer. D) the audit committee. Answer
D
18) When dealing with the administration of the IT function and the segregation of IT duties A) in large organizations, management should assign technology issues to outside consultants. B) programmers should investigate all security breaches. C) the board of directors should not get involved in IT decisions since it is a routine function handled by middle management. D) in complex environments, management may establish IT steering committees. Answer
D
19) Hanlon Corp. maintains a large internal audit staff that reports directly to the accounting department. Audit reports prepared by the internal auditors indicate that the system is functioning as it should and that the accounting records are reliable. An independent auditor will probably A) eliminate tests of controls. B) increase the depth of the study and evaluation of administrative controls. C) avoid duplicating the work performed by the internal audit staff. D) place limited reliance on the work performed by the internal audit staff. Answer
D
20) External financial statement auditors must obtain evidence regarding what attributes of an internal audit (IA) department if the external auditors intend to rely on IA's work? A) integrity B) objectivity C) competence D) all of the above Answer
D
21) Controls specific to IT include all of the following except for A) adequately designed input screens. B) pull-down menu lists. C) validation tests of input accuracy. D) separation of duties. Answer
D
22) The ________ is helpful in preventing classification errors if it accurately describes which type of transaction should be in each account. A) general ledger B) general journal C) trial balance D) chart of accounts Answer
D
27) Which of the following is not an application control? A) reprocessing authorization of sales transactions B) reasonableness test for unit selling price of sale C) post-processing review of sales transactions by the sales department D) logging in to the company's information systems via a password Answer
D
3) Firewalls are used to protect from A) erroneous internal handling of data. B) insufficient documentation of transactions. C) illogical programming commands. D) unauthorized external users. Answer
D
3) Which of the following statements related to application controls is correct? A) Application controls relate to various aspects of the IT function including software acquisition and the processing of transactions. B) Application controls relate to various aspects of the IT function including physical security and the processing of transactions in various cycles. C) Application controls relate to all aspects of the IT function. D) Application controls relate to the processing of individual transactions. Answer
D
6) Which of the following is correct with respect to the design and use of business documents? A) The documents should be in paper format. B) Documents should be designed for a single purpose to avoid confusion in their use. C) Documents should be designed to be understandable only by those who use them. D) Documents should be prenumbered consecutively to facilitate control over missing documents. Answer
D
7) Security controls should require that users enter a(n) ________ before being allowed access to software and other related data files. A) echo check B) parity check C) self-diagnosis test D) authorized password Answer
D
8) Typical controls developed for manual systems which are still important in IT systems include A) management's authorization of transactions. B) competent personnel. C) adequate preparation of input source documents. D) all of the above. Answer
D
9) Which of the following best describes an entity's accounting information and communication system? A) Monitor transactions, Record and process transactions, Initiate transactions Yes Yes Yes B) No No No C) Yes No No D) No Yes Yes
D
11) Companies using e-commerce systems to transact business electronically do not need to be concerned about how their e-commerce partners manage IT systems risks. Answer
FALSE
13) Enterprise resource planning (ERP) systems integrate limited aspects of an organization's business activities and transactions into one accounting information system. Answer
FALSE
14) Management is not as concerned about internal controls when they decide to outsource some or all of their IT needs to cloud computing environments and suppliers. Answer
FALSE
21) Under the Dodd-Frank federal financial reform legislation, all public companies are required to obtain an audit report on internal control over financial reporting. Answer
FALSE
22) When a company designs and implements internal controls, the cost of the controls is not a valid consideration. Answer
FALSE
23) Control activities are a subcomponent of the information and communication component of internal control. Answer
FALSE
24) Adequate documents and records are a subcomponent of the control environment. Answer
FALSE
24) If required under special circumstances, an auditor must step in at an audit client and establish and maintain the audit client's system of internal controls to ensure reliable financial reporting. Answer
FALSE
25) Two key concepts underlie management's design and implementation of internal controls are absolute assurance and inherent limitations. Answer
FALSE
26) Auditing standards prohibit reliance on the work of internal auditors due to the lack of independence of the internal auditors. Answer
FALSE
26) It is possible for management to design an ideal and effective system of internal controls for example over the counting of the physical inventory. Answer
FALSE
28) An example of a specific authorization is management setting a policy authorizing the ordering of inventory when less than a one-week supply is on hand. Answer
FALSE
28) It is possible, under certain circumstances, for financial statements to correctly reflect GAAP or IFRS even if internal controls over financial reporting are inadequate. Answer
FALSE
29) The auditor is always concerned with their audit client's controls that affect the efficiency and the effectiveness of company operations, as these controls will always influence the fair presentation of the financial statements. Answer
FALSE
30) Once the auditor is satisfied with the transaction-related controls in the revenue and accounts receivable area, it is not important for the auditor to gain an understanding of the controls that exist over the ending account balances and the related disclosures made in the financial statements. Answer
FALSE
30) The COSO framework, updated in 2013, provides a rules-based approach that provides additional guidance on designing and implementing an effective system of internal controls. Answer
FALSE
32) The audit committee of the board of directors must exercise oversight over the design and the performance of internal controls over financial reporting, as well as not delegating the responsibilities for these internal controls to management. Answer
FALSE
33) The company forms a committee to identify specific risks inside of the company related to information technology. As shown in the COSO cube, this action is related to organizational structure. Answer
FALSE
34) A small business has four employees, including the owner of the business, working for the business on a daily basis processing cash receipts, making cash disbursements, processing payroll, and invoicing customers. In this situation, separation of duties is impossible. Answer
FALSE
35) The effectiveness of automated controls depends solely on the competence of the personnel performing the controls. Answer
FALSE
38) Output controls focus on preventing errors during processing. Answer
FALSE
41) IT controls are classified as either input controls or output controls. Answer
FALSE
5) Section 404 of the Sarbanes-Oxley Act requires that both private and public companies issue an internal control report. Answer
FALSE
7) Deficiencies in internal controls may cause significant losses, delay financial reporting, but cannot result in material misstatements in the financial statements. Answer
FALSE
8) The Sarbanes-Oxley Act requires either management of U.S. public companies or their auditors to report on the effectiveness of internal controls over financial reporting. Answer
FALSE
10) A system of internal controls consisting of policies and procedures are designed to provide management with reasonable assurance that the company can achieve its goals and objectives. Answer
TRUE
10) LANs link equipment within a single or small cluster of buildings and are used within a company. Answer
TRUE
11) Management has a legal and a professional responsibility to be sure external financial information, and the information contained therein, are fairly presented in accordance with generally accepted accounting principles and International Financial Reporting Standards, when required. Answer
TRUE
12) Digital signatures are used by individuals and companies engaged in e-commerce to guarantee the integrity and the authenticity of transactions or agreements executed between parties. Answer
TRUE
12) One of management's broad objectives in designing an effective internal control system is to help ensure that the organization follows laws and regulations impacting the organization. Answer
TRUE
15) Cost-benefit considerations should always be part of the consideration of most types of outsourcing-related decisions made by management. Answer
TRUE
23) The auditor's responsibilities for internal control include understanding and testing the audit client's internal controls over financial reporting. Answer
TRUE
25) The chart of accounts is helpful in preventing classification errors if it accurately describes which type of transaction should be in each account. Answer
TRUE
27) If an auditor wishes to rely on the work of internal auditors (IA), the auditor must obtain satisfactory evidence related to the IA's competence, integrity, and objectivity. Answer
TRUE
27) Management's report on internal controls must identify the framework used to evaluate the effectiveness of internal controls, and this framework may include other internal control frameworks which exist around the world. Answer
TRUE
29) Personnel responsible for performing internal verification procedures must be independent of those originally responsible for preparing the data. Answer
TRUE
31) As a result of the Dodd-Frank federal financial reform legislation passed by Congress in 2010, only larger public companies (accelerated filers) are now required to obtain an audit report from their auditors on internal control over financial reporting. Answer
TRUE
31) Even without an effective control environment, it is likely that the other four components of the COSO framework can result in effective internal controls. Answer
TRUE
31) Parallel testing is used when old and new systems are operated simultaneously in all locations. Answer
TRUE
32) Programmers should only be allowed to work with test copies of programs and data. Answer
TRUE