a company's internal control system quizlet

Internal Control. a) Hyperlinks D) to efficiently conduct the Audit of Financial Statements. Processing controls are a category of application controls. C) allows quick retrieval of data, but at a cost of inefficient use of file space. Monitoring is a major component of the COSO Internal Control-Integrated Framework. C) There is a separation of duties between programmer and operators. Tipalti B.V. is a limited company registered in Amsterdam; Chamber of Commerce number: 83456902; registered office: Grote Bickersstraat 74-78, 1013KS Amsterdam, The Netherlands. The policies, plans, and procedures implemented by management of the organization in order to. These reports are presented to management and the Audit Committee of the Board of Directors. b) Most computer crime laws define their terms 61. B) Employees who authorize transactions should not have custody of related assets. A good system of internal control: A. An auditor is currently assessing control risk and finds that it is lower than had been anticipated. a) IDA At the moment, Xavier is assessing the control risk surrounding the recognition of sales revenue. A) Inherent limitations of any internal control structure. B) Documents should be designed for a single purpose to avoid confusion in their use. B) increase the depth of the study and evaluation of administrative controls. C) Auditors generally emphasize internal control over account balances rather than classes of transactions. B) Application controls are likely to be effective only when general controls are effective. Question: A company's internal control system: A. B. In amendments effective April 2020, the Securities and Exchange Commission (SEC) exempts reporting companies with under $100 million in revenue from separate attestation of their ICFR (internal control over financial reporting) by an independent auditor. d. guarantee accurate financial statements. Formula & Examples. Risk assessment for financial reporting is management's process for identifying, analyzing, and responding to risks relevant to the preparation of financial statements in conformity with, B) Generally Accepted Accounting Principles. D) total debit amounts and total credit amounts. Sarbanes-Oxley Act of 2002 and Section 404. requires publicly traded companies to issue "internal control report" that states management is responsible for establishing and maintaining adequate internal controls. Processing data through the use of simulated files provides an auditor with information about the operating effectiveness of control policies and procedures. Internal controls are notdesigned to provide reasonable assurance that. B) Approval of a detailed construction budget for a warehouse. Regarding internal control system failures. d) Flat A) Internal Control--Integrated Framework - COSO. 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, 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, The auditors primary purpose in auditing the clients system of internal control over financial reporting is. a) Social engineering At the end of the day, the staff auditor has created a series of flowcharts, questionnaires, and narrative descriptions based on the understanding she has obtained. C) The auditor is likely to do additional substantive testing. Significant deficiencies and material weaknesses in internal control of a public company must be reported to which of the following? Transaction authorization within an organization may be either specific or general. B) to evaluate the effectiveness of the companys internal controls over all relevant assertions in the financial statements. Quiz Questions: Chapter 9 Flashcards | Quizlet Tommy, Lee, & Jones, CPAs is the auditor of HR Specialist Company and has recently issued a report detailing HR Specialist Company's procedures and policies for payroll processing services, which it has provided to Martin & Lawrence. 49. D) competency and dependability of the people using it. C) Because of the cost-benefit relationship, a client may apply controls on a test basis. In obtaining an understanding of a manufacturing entity's internal control concerning inventory balances, an auditor most likely would: C) Review the entity's descriptions of inventory policies and procedures. 47 The least effective physical security control for a computer center is: C) management is responsible for understanding and testing internal control over financial reporting. q) Monitoring A) to prevent fraudulent financial statements from being issued to the public. You'll get a detailed solution from a subject matter expert that helps you learn core concepts. The COSO framework is useful for effective ICFR (internal control over financial reporting), including cash controls, accounts payable internal controls, and AP financial controls. For proper separation of duties, the same employee isnt handling assets like cash and recording accounting transactions for revenue, costs, assets, expenses, and other expenditures. d) Dial back system External financial statement auditors must obtain evidence regarding what attributes of an internal audit (IA) department if the external auditors intend to rely on IAs work? c) URL 34. 37 Which of the following is not a processing control? A) correct errors in the computer programs. The $630 difference would be included on the bank reconciliation as a(n): a. addition to the cash balance per books. Financial Accounting Chapter 7 Review Flashcards | Quizlet establish responsibility An effective system of internal control _____. Exam 2 Chapter 6 Flashcards | Quizlet Monitors company and employee performance. b) An optimal internal control package is developed for a company's system by implementing a standardized package of control procedures D) companies must use the COSO framework to establish internal controls. B) Take a sample of bills of lading (or other shipping document) and match those documents to the appropriate sales invoice. A company's internal control system: Eliminates the company's risk of loss. d) They cannot be used by hackers Which of the following procedures provides the greatest assurance that this control is operating effectively? When a company designs and implements internal controls, cost of the controls is nota valid consideration. Which of the following controls prevent and detect errors while transaction data are processed? C) Management presents its written assertion about the effectiveness of the internal control structure. Output controls need to be designed for which of the following data integrity objectives? B) achievement of the objectives of internal control. A) in large organizations, management should assign technology issues to outside consultants. numbers. D) company personnel comply with applicable rules and regulations. D) Employees who authorize transactions should have recording responsibility for these transactions. B) authorization, recording, and custody. a) Check digit 50. Which of the following is the most common framework in the US? 62. a) Internal control is not affected by people. b. An effective system of control procedures over the payroll function would include: B) Verification of agreement of job time tickets with employee clock card hours by a payroll department employee. AS 1305: Communications About Control Deficiencies in an Audit of c) Double mistakes canceling out each other c) Logic bomb A) the accuracy of accounting system outputs depends heavily on the accuracy of inputs and processing. When an auditor increases the assessed level of control risk because certain control procedures were determined to be ineffective, the auditor would most likely increase the. B) the frequency and effectiveness of the controls. In reporting on an entity's internal control structure over financial reporting, a practitioner should include a paragraph that describes the. c) Opening suspicious emails and attachments Which of the following is most correct regarding the requirements under Section 404 of the Sarbanes-Oxley Act? b) Color-coded identification badges The ultimate purpose of assessing control risk is to contribute to the auditor's evaluation of the risk that. a) Every control procedure that offers benefits to a company should be implemented into the company's system a) Tests of alphanumeric field content Which of the following may increase risk to an organization? Study with Quizlet and memorize flashcards containing terms like 1. 6) Sarbanes-Oxley requires management to issue an internal control report that includes two specific items. c) It is used by the SEC to collect and store financial information about companies A) Investigation of variances within a formal budgeting system. If true, company employees are using this scheme to steal goods from the company. a) Acquiring a vaccine or anti virus program Which of the following procedures most likely would be considered a weakness in an entity's internal controls over payroll? Separation of duties is essential in preventing errors and intentional misstatements on the financial statements. A) low likelihood that material misstatements will not be prevented or detected by internal controls. Chapter 9 23. Three objectives of a company's internal control D) The audits of internal control and the financial statements provide absolute assurance as to misstatements. D. provides for all three of the above. a) Limited employee access a. system is used to control cash receipts. A) It consulted with another CPA about accounting matters. 47. The internal control framework used by most U.S. companies is the ________ framework. An auditor uses the knowledge provided by the understanding of internal control and the assessed level of control risk primarily to. Regarding the cost-benefit concept, which of the following statements is true? A periodic review by internal auditors that stresses the evaluation of the efficiency and effectiveness of a department's procedures is called a (an): A) auditors can ignore controls affecting internal management information. 3. meet company objectives. A CPA firm is beginning the audit of Panasian Corporation. Which of the following would most likely be an internal control procedure designed to detect errors and irregularities concerning the custody of inventory? D) Select and examine canceled checks and ascertain that the related vouchers are dated no later than the checks. Auditors use larger sample sizes later in the year to test internal control procedures, as required by the PCAOB. Strong internal controls. B. C. Eliminates the need for an audit. D) the librarian and the IT manager should be the only ones involved in the decision process. B) the board of directors may not be aware of managements attitude toward the control environment. Which of the following is ordinarily considered a test of controls? Chapter 9: Intro to Internal Control Systems Flashcards | Quizlet Ensure reliable accounting. A company's internal control system A) Eliminates the risk of loss B) Monitors and controls business activities C) Eliminates human error D) Eliminates the need for andits. A) Tests of controls and limited tests of current year property and equipment transactions. An auditor would consider internal control over a client's payroll procedures to be ineffective if the payroll department supervisor is responsible for. A) Application controls are effective even if general controls are extremely weak. Firewalls can protect company data and software programs. MGMT 136 Chapter 6 Flashcards | Quizlet D) An auditor may communicate reportable conditions during an audit or after the audit's completion. An ideal control is: d) Revising standards for production costs on a weekly basis a) Most companies handle abuse as an internal matter Which of the following statements related to application controls is correct? What are the two possible types of control deficiencies? On an annual basis, managements assessment of internal control over financial statements is performed. Definition: Internal Control can be defined as a system designed, introduced and maintained by the company's management and top-level executives, to provide a substantial degree of assurance in achieving business objective, while complying with the policies and laws, safeguarding the assets, maintaining efficiency and effectiveness in regular op. Even the best designed control systems are subject to failure due to: A) Human error, faulty judgment, collusion and management override. A) Transaction-related audit objectives typically have no impact on the rights and obligations objectives. D) allows quick retrieval of data, but it needs to update files continually. c) A control procedure is considered cost effective if it can be determined that the cost of operating the procedure will be lower in the current period than in the previous period This language allows its users to create web pages on the Internet: e) none of these The intent is to reduce regulatory burdens for emerging growth companies. b) Unfound record test b. the establishment and maintenance of internal control is an important responsibility of the internal auditor. Xavier, CPA is currently auditing the financial statements of the Polk Corporation. Chapter 4 Accounting Flashcards | Quizlet ________ is the information technology and internal control processes an organization has in place to protect computers, networks, programs, and data from unauthorized access. C) both A and B, because they are equally important. Eliminates the company's risk of loss. B) Independent comparisons of finished goods records with counts of goods on hand. b) COBIT rejects the definition of internal control from the COSO report Which of the following tests determines that every field in a record has been completed? a) Observation, recording and transcription of data d) Check digits A) The audits of internal control and the financial statements provide reasonable assurance as to misstatements. What should the auditors do as a result? In the early stages of an audit engagement, the independent CPA must obtain a general understanding of internal control. d) Embezzlement using computerized data Which of the following statements is true? C) inherent limitations and reasonable assurance. Accounting standard frameworks for financial reporting include U.S. GAAP (generally accepted accounting principles), International Financial Reporting Standards (IFRS), special purpose OCBOA (other comprehensive bases of accounting), and the FRF for SMEs, according to an AICPA FAQ. Hide Feedback, b. deter fraud and prevent misleading financial statement. D) The personnel department promptly sends employee termination notices to the payroll supervisor. b) Salami technique Report of outside consultants on future market changes, Report of outside consultants on future market changes = risk assessment. The PCAOB places responsibility for the reliability of internal controls over the financial reporting process on. In assessing control risk, the auditor starts by learning the design of the control system and then considers whether to perform tests of individual controls. Martin & Lawrence should: D) Make appropriate inquiries to assess the professional reputation of Tommy, Lee, & Jones. D) Examine shipping documents for matching sales invoices. 1) a) Rewrites the instructions of a particular computer program Eliminates the need for managers' certification of controls. 2. Which of the following is an inherent limitation in internal control? C) Determine the acceptable level of detection risk for financial statement assertions. Adequate documents and records is a subcomponent of the control environment. 33. It also explains the six essential controls that should be a part of your internal control system. A) multiple users can access and update data files. SOX covers CEO & CFO (or chief accounting officer CAO) annual report certifications (section 302) of internal control and the companys financial statements adequacy, including disclosures, reporting the companys internal control structure, and data security control policies. B) Segregation of duties would be violated if the same person authorizes the payment of a vendors invoice and also approves the disbursement of funds to pay the bill. a) Falling internal control Flashcards | Quizlet b) Preventive control Who is responsible for establishing a private companys internal control? The X in the term XBRL stands for: C) comparison of recorded accountability with assets. In an audit of financial statements in accordance with generally accepted auditing standards, an auditor is required to: A) Document the auditor's understanding of the entity's internal control structure. Control activities help assure that the necessary actions are taken to address risks to the achievement of the companys objectives. d) Fraudulent data D) The system contains an excess number of possible problems so that testing is required. AUDIT. Ch 6HW (10-Qs) Flashcards | Chegg.com Controls include preventive and detective controls. D) multiple users could all access the data simultaneously causing a system shutdown. Under the Dodd-Frank federal financial reform legislation, all public companies are required to obtain an audit report on internal control over financial reporting. b) Inaccuracy of one digit Terms in this set (2) internal control system. o) Management-by-exception audit b) Often, computerized data are unreadable to the human eye Controls specific to IT include all of the following exceptfor, An internal control deficiency occurs when computer personnel. List below the four general guidelines. c) X-rated C) guarantee that the company complies with all laws and regulations. 65. Internal Control (Chapter 6) Flashcards | Quizlet B) Application controls relate to various aspects of the IT function including physical security and the processing of transactions in various cycles. C) Operations, financial reporting and compliance with laws and regulations. Which of the following activities would be least likely to strengthen a companys internal control? Controller vs CFO: Role Differences & Responsibilities, Bargaining Power of Suppliers: Overview & Strategy, Bargaining Power of Buyers: Overview & Strategy, What is a Fractional CFO & How to Find One for Hire. Which of the following of internal control deals with hiring, training, evaluation, compensation, and promotion of employees? A) The documents should be in paper format. d) Tags are now permanently standardized across industries, Explore over 16 million step-by-step answers from our library, View answer & additonal benefits from the subscription, Explore recently answered questions from the same subject, Test your understanding with interactive textbook solutions, Horngren's Financial & Managerial Accounting, Horngren's Financial & Managerial Accounting, The Financial Chapters, Horngren's Financial & Managerial Accounting, The Managerial Chapters, Horngren's Accounting: The Managerial Chapters, Horngren's Cost Accounting: A Managerial Emphasis, Horngren's Accounting, The Financial Chapters, Explore documents and answered questions from similar courses, Explore recently asked questions from the same subject. Internal controls are important because they: a. ensure that the company maintains a compensating balance. A large portion of errors in IT systems result from data entry errors. C) The audit of financial statements provides absolute assurance of misstatement. The company should have procedures to remedy internal control, particularly those deemed significant deficiencies or the most severe classification of ICFR deficiency, material weaknesses. Without an effective ________, the other components of the COSO framework are unlikely to result in effective internal control, regardless of their quality. ACCT: Chapter 4 Flashcards | Quizlet D) place limited reliance on the work performed by the internal audit staff. Companies using e-commerce systems to transact business electronically do notneed to be concerned about how their e-commerce partners manage IT systems risks.
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