Chapter 7
At the completion of the audit the auditors are least likely to know
Actual control risk
Which of the following is not ordinarily a procedure for documenting an auditor's understanding of internal control for planning purposes?
Confirmation
When a CPA decides that the work performed by internal auditors may have an effect on the nature, timing, and extent of the CPA's procedures, the CPA should consider the competence and objectivity of the internal auditors. Relative to objectivity, the CPA should
Consider the organizational level to which the internal auditors report the results of their work
Which of the following would be LEAST likely to be considered an objective of internal control?
Detecting management fraud
Effective internal control in a small company that has an insufficient number of employees to permit proper separation of responsibilities can be improved by
Direct participation by the owner in key record keeping and control activities of the business
Which of the following is not an advantage of establishing an enterprise risk management system within an organization?
Eliminates all risks
To have an adequate basis to issue a management report on internal control under Section 404(a) of the Sarbanes-Oxley Act, management must do all of the following, except
Establish internal control with no material weakness.
Test of controls do not address
How controls were originated
A primary objective of procedures performed to obtain an understanding of internal control is to provide the auditors with
Knowledge necessary to determine the nature, timing, and extent of further audit procedures
An entity's ongoing monitoring activities often include
Management review of weekly performance reports
Which of the following is least likely to be a test of controls?
Observation of confirmations
Tests of controls ordinarily are designed to provide evidence of
Operating effectiveness
Controls over financial reporting are often classified as preventative, detective, or corrective. Which of the following is an example of a detective control?
Preparing bank reconciliations
An auditor may compensate for a weakness in internal control by increasing the extent of
Substantive tests of details
The preliminary assessments of control risks are often referred to as
The planned assessed level of control risk
Which of the following symbols indicate that a file has been consulted?
squre - triangle
When the auditors are performing a first-time internal control audit in accordance with the Sarbanes-Oxley Act and PCAOB standards, they must
Test controls for all significant accounts.