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Kieser ACG4651 Week 3 Quiz (A++++++++++ Answer)
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Question 1

The use of fidelity bonds protects a company from embezzlement loses and also:

Minimizes the possibility of employing persons with dubious records in positions of trust.

Reduces the company's need to obtain expensive business interruption insurance.

Allows the company to substitute the fidelity bonds for various parts of internal control.

Protects employees who made unintentional errors from possible monetary damages resulting from such errors.

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Question 2

Which of the following factors would most likely be considered an inherent limitation to an entity's internal control?

The complexity of the information processing system.

Human judgment in the decision making process.

The ineffectiveness of the board of directors.

The lack of management incentives to improve the control environment.

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Question 3

In the consideration of internal control, the auditor is basically concerned that it provides reasonable assurance that:

Management cannot override the system.

Operational efficiency has been achieved in accordance with management plans.

Misstatements have been prevented or detected.

Controls have not been circumvented by collusion.

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Question 4

Which statement is correct relating to a potential successor auditor's responsibility for communicating with the predecessor auditors in connection with a prospective new audit client?

The successor auditors have no responsibility to contact the predecessor auditors.

The successor auditors should obtain permission from the prospective client to contact the predecessor auditors.

The successor auditors should contact the predecessors regardless of whether the prospective client authorizes contact.

The successor auditors need not contact the predecessors if the successors are aware of all available relevant facts.

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Question 5

In the consideration of internal control, the operating effectiveness of controls is tested by:

Flowcharts verification.

Tests of controls.

Substantive procedures.

Decision tables.

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Question 6

CPA firms may use written narratives to describe internal control in their audit working papers.

True

False

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Question 7

Which is most likely when the assessed level of control risk increases?

Change from performing substantive procedures at year-end to an interim date.

Perform substantive procedures directed inside the entity rather than tests directed toward parties outside the entity.

Use the maximum number of dual purpose tests.

Use larger sample sizes for substantive procedures.

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Question 8

Which of the following is least likely to be a factor that might indicate to an auditor that an identified risk of misstatement requires special audit consideration?

Complex calculations are involved.

The rate of technological change is moderate in the industry.

The potential for fraud seems high.

Various subjective methods of application of a key accounting policy exist.

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Question 9

An integrated audit performed under Section 404b of the Sarbanes-Oxley Act addresses financial statements and:

Compliance with laws.

Internal control over asset safeguarding.

Internal control over financial reporting.

Suitable criteria.

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Question 10

Which of the following must the auditor communicate to the audit committee?

Significant deficiencies and material weaknesses.

Only significant deficiencies.

Only material weaknesses.

Neither significant deficiencies nor material weaknesses.

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Question 11

Which of the following is least likely to be considered an appropriate response relating to risks the auditors identify at the financial statement level?

Assign more experienced staff.

Incorporate additional elements of unpredictability in the selection of audit procedures.

Increase the scope of auditor procedures.

Emphasize the need to remain neutral, rather than to exercise professional skepticism.

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Question 12

Incompatible duties exist when an employee is in a position to perpetrate and conceal errors or fraud.

True

False

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Question 13

Of the following statements about internal control, which one is not valid?

No one person should be responsible for the custodial responsibility and the recording responsibility for an asset.

Transactions must be properly authorized before such transactions are processed.

Because of the cost/benefit relationship, a client may apply control procedures on a test basis.

Control activities reasonably insure that collusion among employees cannot occur.

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Question 14

Which of the following would be least likely to be considered a benefit of effective internal control?

Eliminating all employee fraud.

Restricting access to assets.

Detecting ineffectiveness.

Ensuring authorization of transactions.

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Question 15

In assessing the objectivity of a client's internal auditors, the CPA would be most likely to consider internal auditor's:

Education levels.

Experience.

Organizational status within the company.

Training and supervisory skills.

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Question 16

The external auditors might consider the procedures performed by the internal auditors because:

They are employees whose work must be reviewed during substantive testing.

They are employees whose work might affect the external auditors' work.

Their work impacts upon the cost/benefit tradeoff in evaluating inherent limitations.

Their degree of independence may be inferred by the nature of their work.

Question 17

Auditors are required to consider a client's internal control. 

a. Describe the two purposes of the auditors' consideration of a client's internal control. 

b. Even the best internal control has certain limitations. List three of those limitations.

Question 18

When considering a client's internal control, the auditors focus on its various characteristics. For each of the following characteristics indicate the auditors' responsibility under generally accepted auditing standards and the procedures used to meet that responsibility.

a. The design of internal control.

b. Controls have been implemented (placed in operation).

c. The operating effectiveness of controls.

 

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  • Kieser ACG4651 Week 3 Quiz (A++++++++++ Answer)
    $20.00

    Question Question 1 The use of fidelity bonds protects a company from embezzlement loses and also: Minimizes the possibility of employing persons with dubious records in positions of trust. Reduces the company's need to obtain expensive business interruption insurance. Allows the company to substitute the fideli

    Submitted on: 29 Mar, 2017 02:59:13 This tutorial has not been purchased yet .