Audit Exam Practice Flashcards

2. Which of the following statements concerning internal controls is true? A. Internal administrative controls are designed to limit the amount of funds spent on investments. B. The control procedure, separation of duties, prohibits the employment of a husband and wife or other closely related parties within the

Having internal controls is one thing, but how the company evaluates that control is a matter all by itself. Being an independent auditor, it is our job to understand an entity and

(TCO 5) Internal Controls are required to safeguard assets and to ensure ethical business practices. (1) Identify and explain the reason for any two of the five components of internal control (10 points) and (2) provide examples of how your two selected components of internal control will meet the goal of safeguarding assets and promoting ethical business

Auditors have the responsibilities as well as management to report internal controls. The auditors must examine closely management’s claim of effectiveness and also physically test the controls. After the examination, the auditors should express their opinion and any recommendations to fix any internal control weaknesses.

Our internal controls can assist us in not committing devious acts; and the external controls are there in place in case devious acts are committed.

Which of the following is not a primary objective of internal control as established by COSO?

Identify the control objectives that would be satisfied by the recommendations the internal auditors proposed during the 2014 audit. Explain how each objective would be met by the recommended procedures.

Internal Controls are the policies and procedures used to safeguard assets, ensure accurate business information, and ensure compliance with laws and regulations. In the 2000’s, there were many businesses, stockholders, creditors and investors affected by scandals and fraud. The Sarbanes-Oxley Act of 2002 is extremely important to the laws affecting U.S businesses today; this is why there is such an emphasis on the importance of effective internal controls. The three internal control objectives can be achieved by applying the five elements of internal controls. The five elements are control environment, risk assessment, control procedures, monitoring and information communication. Each of the five elements performs a separate duty towards a business in order to ensure that the business is being protected. I’ve been employed at Target for nearly 2 years now and I witness and work with the internal controls of the business. Target is the second largest discount retailer in the United States and because of this they take internal controls very seriously. When any person comes in for an interview, your interviewer introduces you to them right away as a way to introduce you to the company.

The five interrelated elements of internal control draw from the way management operates the organization and integrates it with the management process. The elements of internal control include the control environment, risk assessment, control activities, information and communication, and monitoring. Discipline and structure is the foundation of internal control, in combination with integrity, ethical values, management way of thinking, operational style, and how the organization develops their staff; the control environments offer a firm composition of a control

My understanding of this article is that the monitoring of internal control is performed through application of ongoing evaluations and separate evaluations. Over time, these evaluations make sure that other components of internal control continue to function. In addition, another principle is that the evaluations assist the progress identification of internal control deficiencies and communicate them to the parties responsible for taking corrective actions.

In addition, the auditor should achieve the understanding of the control environment by evaluating the management along with honesty level, ethical principles and control environment elements to determine the risk of misstatement. However, in the internal control evaluation he should consider the integrity, management level, policies, and responsibilities then planning to obtain sufficient evidence for supporting his opinion on the internal control (AS 5). CUC had a poor quality in the internal control system and management put the pressure and incentives to meet Wall Street expectations.

The framework describes internal control as a process designed to provide reasonable assurance regarding the achievement of objectives in the following categories:

1. Use specific examples to identify weakness that existed in the internal control environment at BISD. Based on the identified weaknesses, what improvements to the control environment would you recommend?

B. clearly state audit objectives for, and the delegation of, authority to the maintenance and review of internal controls.

Effective internal controls protect a company’s assets, maintain compliance, improve operations, prevent fraud, and promote accuracy in financial reporting. In 1992 the