Internal controls

Which of the following is included in understanding business processes related to classes of transactions significant to the financial statements?

• The company dress code
• The procedures used to initiate, record, process, and report transactions
• The names of the company’s clients
• The location of the company headquarters

classes of transactions significant to the financial statements can be recorded in which of the following?

• . Manual systems only
• Information technology systems only
• Either manual or electronic systems
• Neither manual nor electronic systems

What is included in an entity's financial reporting process?

• The financial statement preparation process, including disclosures, and also procedures related to controls surrounding journal entries and other adjustment
• Understanding the information system relevant to financial reporting
• Both a and b
• None of the above

What is the purpose of understanding the information system relevant to financial reporting?

• To identify and assess risks related to financial reporting
• To prepare the financial statements
• To comply with tax regulations
• Option B & C

What are standard journal entries typically used to record?

• Transactions outside the normal course of business
• Transactions and adjustments that occur in the normal course of business
• Non-recurring estimates
• Unusual transactions or adjustments

How many components of internal control are there?

• 2
• 3
• 4
• 5

What is definition of preventive control

• Prevent errors or fraud leading to financial statement misstatement.
• Detect and correct errors or fraud post-occurrence
• A control performed by an automated system without direct human intervention
• A control performed by an individual or individuals

What is definition of Manual control

• Prevent errors or fraud leading to financial statement misstatement.
• Detect and correct errors or fraud post-occurrence
• A control performed by an automated system without direct human intervention
• A control performed by an individual or individuals

Which of the following factors can contribute to changes in an entity's risk profile?

• Employee training programs
• Changes in the operating environment
• Marketing campaigns
• Office renovations

Which of the following circumstances is likely to prompt a reassessment of an entity's risk management strategy?

• Launch of a new advertising campaign
• Hiring of temporary staff for a short-term project
• Implementation of new information systems
• Routine maintenance of existing equipment