Module 4 Part 1-6

What are internal controls primarily designed to achieve?

• Protect resources, ensure accurate financial reporting, and ensure compliance with policies and regulations.

• Increase profitability.

• Reduce organizational expenses.

• Control employee behavior.

Which of the following is NOT a component of internal control?

• Control Environment

• Risk Assessment

• Profit Maximization

• Monitoring

Who is ultimately responsible for internal controls within an organization?

• Internal Auditors

• The Board of Governors, Chancellor, and President

• Individual Employees

• External Auditors

Which law, passed in 2002, increased auditor independence work and led to best practices in internal controls?

• Dodd-Frank Act

• Sarbanes-Oxley Act (SOX)

• Securities Act

• Fair Labor Standards Act

What does the term 'Control Environment' refer to?

• The organization’s financial resources.

• The foundation for all other components of internal control.

• The technological infrastructure.

• The physical office space of the organization.

Why do internal controls only provide 'reasonable assurance' and not 'absolute assurance'?

• Because of the inherent limitations of internal controls, including human judgment and errors.

• Because of lack of resources.

• Because of management's lack of interest.

• Because of legal constraints.

What is the role of internal auditors in internal controls?

• Establishing internal controls.

• Examining and making recommendations to improve internal controls.

• Managing the entire organization.

• Conducting external audits.

What is an example of a control activity?

• Financial reporting

• Segregation of duties

• Risk assessment

• Communication

Which of the following is a factor in the Control Environment?

• Technology advancement

• Management's philosophy and operating style

• Employee turnover

• Market conditions

What is risk assessment in the context of internal controls?

• The identification and analysis of risks to achieving the organization's objectives.

• Ensuring accurate financial reporting.

• Training employees on ethics.

• Setting organizational goals.