Internal Control
Chapter 5: Internal Control over Financial Reporting
1. Internal control is a process designed to guarantee the achievement of the objectives of reliable financial reporting, compliance with laws and regulations and ineffective and inefficient operations.
FALSE
2. Auditing standards require that the auditor exercise professional judgment and maintain professional skepticism throughout the planning and performance of the audit.
TRUE
3. If internal controls are not enforced they are useless and can lead to waste and fraud.
TRUE
4. If an organization is too lenient in its treatment of employees who committed fraud, the control environment will be seen as stronger than if the treatment were harsher.
FALSE
5. Weakness in the tone at the top have been associated with most financial frauds during the past decade.
TRUE
6. Virtually all major financial frauds from the past decade were associated with organizations that had weaknesses in the control environment
TRUE
7. Internal control is a process designed to provide reasonable assurance regarding the achievement of the objectives of reliable financial reporting, compliance with laws and regulations and effective and efficient operations, and safeguarding of the assets.
TRUE
8. The quality of an organization 's internal control will affect both the audit approach and the amount of testing needed for an engagement.
TRUE
9. Control activities are the policies and procedures that are established to assist in accomplishing objectives and to mitigate risks.
TRUE
10. Computer controls that are pervasive and affect every computerized system are referred as application controls.
FALSE
11. Control is considered to be part of corporate governance.
TRUE
12. Good control means that risks are identified and dealt with effectively.
TRUE
13. Investors do not place much value on the internal control of the companies in which they invest.
FALSE
14. The PCAOB, in
1. Internal control is a process designed to guarantee the achievement of the objectives of reliable financial reporting, compliance with laws and regulations and ineffective and inefficient operations.
FALSE
2. Auditing standards require that the auditor exercise professional judgment and maintain professional skepticism throughout the planning and performance of the audit.
TRUE
3. If internal controls are not enforced they are useless and can lead to waste and fraud.
TRUE
4. If an organization is too lenient in its treatment of employees who committed fraud, the control environment will be seen as stronger than if the treatment were harsher.
FALSE
5. Weakness in the tone at the top have been associated with most financial frauds during the past decade.
TRUE
6. Virtually all major financial frauds from the past decade were associated with organizations that had weaknesses in the control environment
TRUE
7. Internal control is a process designed to provide reasonable assurance regarding the achievement of the objectives of reliable financial reporting, compliance with laws and regulations and effective and efficient operations, and safeguarding of the assets.
TRUE
8. The quality of an organization 's internal control will affect both the audit approach and the amount of testing needed for an engagement.
TRUE
9. Control activities are the policies and procedures that are established to assist in accomplishing objectives and to mitigate risks.
TRUE
10. Computer controls that are pervasive and affect every computerized system are referred as application controls.
FALSE
11. Control is considered to be part of corporate governance.
TRUE
12. Good control means that risks are identified and dealt with effectively.
TRUE
13. Investors do not place much value on the internal control of the companies in which they invest.
FALSE
14. The PCAOB, in