Internal control

COSO identified five interrelated components of internal control. Which of the following is NOT one of those five?

• risk assessment

• internal control policies

• monitoring

• information and communication

In the ERM model, COSO specified four types of objectives that management must meet to achieve company goals. Which of the following is NOT one of those types?

• responsibility objectives

• strategic objectives

• compliance objectives

• reporting objectives

Which of the following statements is true?

• COSO’s enterprise risk management framework is narrow in scope and is limited to financial controls.

• COSO’s internal control integrated framework has been widely accepted as the authority on internal controls

• The Foreign Corrupt Practices Act had no impact on internal accounting control systems

• . It is easier to add controls to an already designed system than to include them during the initial design stage

All other things being equal, which of the following is true?

• Detective controls are superior to preventive controls.

• . Corrective controls are superior to preventive controls.

• Preventive controls are superior to detective controls.

• . Preventive controls are equivalent to detective controls.

Which of the following statements about the control environment is false?

• Supervision is especially important in organizations that cannot afford elaborate responsibility reporting or are too small to have an adequate separation of duties

• A written policy and procedures manual is an important tool for assigning authority and responsibility.

• . Management’s attitudes toward internal control and ethical behavior have little impact on employee beliefs or actions

• An overly complex or unclear organizational structure may be indicative of problems that are more serious.

To achieve effective segregation of duties, certain functions must be separated. Which of the following is the correct listing of the accounting-related functions that must be segregated?

• control, custody, and authorization

• monitoring, recording, and planning

• control, recording, and monitoring

• authorization, recording, and custody

Which of the following is NOT an independent check?

• periodic comparison of subsidiary ledger totals to control accounts

• re-adding the total of a batch of invoices and comparing it with your first total

• . trial balance

• bank reconciliation

Which of the following is a control procedure relating to both the design and the use of documents and records?

• sequentially prenumbering sales invoices

• comparing actual physical quantities with recorded amounts

• reconciling the bank account

• locking blank checks in a drawer

Which of the following is the correct order of the risk assessment steps discussed in this chapter?

• Estimate costs and benefits, identify threats, identify controls, and estimate risk and exposure.

• Estimate risk and exposure, identify controls, identify threats, and estimate costs and benefits.

• Identify threats, estimate risk and exposure, identify controls, and estimate costs and benefits

• . Identify controls, estimate risk and exposure, identify threats, and estimate costs and benefits

Which of the following is NOT a functions internal control?

• Preventive control

• coersive control

• Corrective control

• Detective control