INSTRUCTION(s): For every general potential error type enumerated below, list down some basic internal controls that may serve as a remedy to prevent the occurrence of said errors. General Potential Error Types Basic Types of Internal Accounting Control Transactions are not properly authorized Recorded transactions are not valid Existing transactions are not recorded Transactions are improperly valued

INSTRUCTION(s): For every general potential error type enumerated below, list down some basic internal controls that may serve as a remedy to prevent the occurrence of said errors. General Potential Error Types Basic Types of Internal Accounting Control Transactions are not properly authorized Recorded transactions are not valid Existing transactions are not recorded Transactions are improperly valued

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter7: Accounting Information Systems

Section: Chapter Questions

Problem 6MC: Which of the following is false about accounting information systems? A. They provide reports that...

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The likelihood that material misstatements may have entered the accounting system and notbeen detected and corrected by the client’s internal control is referred to asa. Inherent risk.b. Control risk.c. Detection risk.d. Risk of material misstatement.
Controls that enhance the accuracy and reliability of the accounting records are automated controls. external controls. physical controls. none of these answer choices are correct.
Which of the following is NOT a potential expo- sure of the FRS? a. a defective audit trail b. general ledger accounts that are out of balance with subsidiary accounts c. unauthorized access to the check register d. unauthorized access to the general ledger
When completing the audit of internal controls for an issuer, the severity of an internal control deficiency depends ona. Whether there is a reasonable possibility that the company’s controls will fail to prevent or detect a misstatement of an account balance or disclosure.b. Whether a misstatement has actually occurred as a result of the deficiency.c. The magnitude of the potential misstatement resulting from the deficiency or the deficiencies.d. Both a and c are correct.e. All of the above are correct.
In which of the following circumstances would an auditor expect to find that an entity had implemented automated controls to reduce risks of misstatement?a. When errors are difficult to predict.b. When misstatements are difficult to define.c. When large, unusual, or nonrecurring transactions require judgment.d. When transactions are high volume and recurring.
Explain the difference between an attribute and an exceptioncondition. State the exception condition for the audit procedure: The duplicate salesinvoice has been initialed indicating the performance of internal verification.
Which of the following statements is associated with analytical procedure test? a. It helps to identify the errors in journal and ledger. b. It helps to test the internal control system. c. It helps to study the comparison of relationships among balance sheet accounts. d. It helps to discover detailed misstatements in the financial statements.
Which of the following statements is FALSE?A. Irregularities are intentional misrepresentations associated with the commission of a fraudB. Errors are unintentional mistakesC. Data conversion provides safe storage for the off-line data files. These files could be backups or current data files.D. Before the auditor can determine the nature and extent of the tests to perform he or she must gain a thorough understanding of the client’s business
Which of the following is an incorrect statement? a. The amount of audit work should vary inversely with the likelihood of material misstatements existing in the accounting records. b. The better the organization’s control structure, the less likely it is that material misstatements will be present c. Complex or unusual transactions are more likely to be recorded in error than recurring or routine transactions are d. If misstatements are likely to occur in the recording process, the auditor should develop procedures to detect misstatements.
How to ensure that overstatement as well as misstatements of account balances due to redundancy and out-of-date of information flows are identified and terminated?
he factor that distinguishes an error from fraud or other irregularities is A) materiality. B) intent. C) whether it is a rand amount or a process. D) whether it is caused by the auditor or the client.
Confirmation of accounts receivable is a presumptively mandatory audit procedure. In performing this procedure, auditors use positive confirmation requests or negative confirmation requests or a combination of both. Describe three conditions that should exist for the auditors to use the negative form of request.