ch7 quiz questions and solutions

11361 Words Jun 4th, 2015 46 Pages
ch7
Student: ___________________________________________________________________________

1.

All companies must follow the guidelines of AS5.
True

2.

Most public companies must follow the guidelines of AS5.
True

3.

False

When auditing a public company, the auditor must form an opinion on the effectiveness of internal control over financial reporting, or issue a disclaimer in the event of a scope limitation.
True

9.

False

The likelihood of an event is "more than remote" when it is "highly possible."
True

8.

False

The PCAOB makes it clear that the CEO and CFO are responsible for the internal control over financial reporting and the preparation of the statements.
True

7.

False

Based on PCAOB guidelines, the audit of ICFR and
…show more content…
Which of the following is not a primary objective of internal control as established by COSO?
A.
B.
C.
D.

Efficiency and effectiveness of operations
Effective purchasing systems
Compliance with laws and regulations
Reliable financial reporting

18. The main goal of auditing internal control is:
A. To allow the auditor to fix any internal control deficiencies
B. To form an opinion on the ability of internal controls to prevent fraud
C. To assure management that internal control is preventing all material misstatements on the financial statements D. To evaluate the effectiveness of controls over all relevant financial statement disclosures in the financial statements 19. An auditor performing an audit of internal control over financial reporting would be required to:
A.
B.
C.
D.

Rely on the work of internal auditors
Test all of the entity's internal controls
Form an opinion on the effectiveness of internal control
Randomly identify accounts for an audit of internal control

20. In determining the extent to which the auditor may use the work of others in the audit of ICFR, the auditor should do all of the following except
A.
B.
C.
D.

Test some of the work performed by others to evaluate the quality and effectiveness of their work
Evaluate the nature of the controls subjected to the work of others
Evaluate the competence and objectivity of the individuals who performed the work
All of the above are required

21.

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