Auditing and Internal Control
Chapter 1—Auditing and Internal Control
TRUE/FALSE
1. Corporate management (including the CEO) must certify monthly and annually their organization’s internal controls over financial reporting.
ANS: F PTS: 1
2. Both the SEC and the PCAOB require management to use the COBIT framework for assessing internal control adequacy.
ANS: F PTS: 1
3. Both the SEC and the PCAOB require management to use the COSO framework for assessing internal control adequacy.
ANS: F PTS: 1
4. A qualified opinion on management’s assessment of internal controls over the financial reporting system necessitates a qualified opinion on the financial statements?
ANS: F PTS: 1
5. The same internal control objectives apply to manual and computer-based information systems.
ANS: T PTS: 1
6. The external auditor is responsible for establishing and maintaining the internal control system.
ANS: F PTS: 1
7. Segregation of duties is an example of an internal control procedure.
ANS: T PTS: 1
8. Preventive controls are passive techniques designed to reduce fraud.
ANS: T PTS: 1
9. The Sarbanes-Oxley Act requires only that a firm keep good records.
ANS: F PTS: 1
10. A key modifying assumption in internal control is that the internal control system is the responsibility of management.
ANS: T PTS: 1 11. While the Sarbanes-Oxley Act prohibits auditors from providing non-accounting services to their audit clients, they are not prohibited from performing such services for non-audit clients or privately held companies.
ANS: T PTS: 1
12. The Sarbanes-Oxley Act requires the audit committee to hire and oversee the external auditors.
ANS: T PTS: 1
13. Section 404 requires that corporate management (including the CEO) certify their organization’s internal controls on a quarterly and annual basis.
ANS: F PTS: 1
14. Section 302 requires the management of public companies to assess and formally report on the effectiveness of their organization’s internal controls.
ANS: F PTS:
TRUE/FALSE
1. Corporate management (including the CEO) must certify monthly and annually their organization’s internal controls over financial reporting.
ANS: F PTS: 1
2. Both the SEC and the PCAOB require management to use the COBIT framework for assessing internal control adequacy.
ANS: F PTS: 1
3. Both the SEC and the PCAOB require management to use the COSO framework for assessing internal control adequacy.
ANS: F PTS: 1
4. A qualified opinion on management’s assessment of internal controls over the financial reporting system necessitates a qualified opinion on the financial statements?
ANS: F PTS: 1
5. The same internal control objectives apply to manual and computer-based information systems.
ANS: T PTS: 1
6. The external auditor is responsible for establishing and maintaining the internal control system.
ANS: F PTS: 1
7. Segregation of duties is an example of an internal control procedure.
ANS: T PTS: 1
8. Preventive controls are passive techniques designed to reduce fraud.
ANS: T PTS: 1
9. The Sarbanes-Oxley Act requires only that a firm keep good records.
ANS: F PTS: 1
10. A key modifying assumption in internal control is that the internal control system is the responsibility of management.
ANS: T PTS: 1 11. While the Sarbanes-Oxley Act prohibits auditors from providing non-accounting services to their audit clients, they are not prohibited from performing such services for non-audit clients or privately held companies.
ANS: T PTS: 1
12. The Sarbanes-Oxley Act requires the audit committee to hire and oversee the external auditors.
ANS: T PTS: 1
13. Section 404 requires that corporate management (including the CEO) certify their organization’s internal controls on a quarterly and annual basis.
ANS: F PTS: 1
14. Section 302 requires the management of public companies to assess and formally report on the effectiveness of their organization’s internal controls.
ANS: F PTS: