Internal Control part2

Internal accounting control comprises the plan of organization and the procedures and records that are concerned with the safeguarding of assets and the:

• Decision process of management

• Reliability of financial records

• Authorization of transactions

• Achievements of administrative objectives

Which of the following is an invalid concept of internal control?

• in cases where a person is responsible for all phases of a transaction there should be a clear designation of that person's responsibility

• the recorded accountability for assets should be compared with the existing assets at reasonable intervals and appropriately be applied on a test basis in some circumstances

• accounting control procedures may appropriately be applied on a test basis in some circumstances

• procedures designed to detect errors and irregularities should be persons other than those who are in a position to perpetrate them

Which of the following best describes the primary purpose of internal controls?

• To prevent all errors and fraud

• To ensure compliance with external regulations

• To mitigate risks and safeguard assets

• To maximize profitability

Which of the following is an example of a preventive control?

• Reconciling bank statements monthly

• Conducting surprise audits

• Implementing segregation of duties

• Investigating suspected fraud incidents

What is the primary purpose of conducting surprise audits in internal controls?

• To prevent all errors and fraud

• To ensure compliance with external regulations

• To mitigate risks and safeguard assets

• To detect and deter potential fraud incidents

What is the main objective of segregation of duties in internal controls?

• To increase employee morale

• To reduce employee turnover

• To prevent collusion and fraud

• To improve communication within departments

Which type of control aims to detect errors or irregularities after they have occurred?

• Preventive control

• Detective control

• Corrective control

• Directive control

Which of the following is NOT a characteristic of effective internal control?

• Flexibility

• Relevance

• Timeliness

• Complexity

Which control activity is aimed at ensuring that all transactions are recorded accurately and completely?

• Physical controls

• Segregation of duties

• Reconciliation

• Authorization controls

Which of the following best describes the role of internal auditors in relation to internal controls?

• Implement controls to prevent fraud

• Evaluate the effectiveness of controls

• Approve financial transactions

• Conduct external audits