Week3-4 Auditing Internal control

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

• To provide absolute assurance that fraud will not occur.

• To provide reasonable assurance regarding the achievement of objectives.

• To detect all errors in financial statements.

• To ensure compliance with external auditors' guidelines.

Which of the following is NOT a component of COSO's internal control framework?

• Control Environment.

• Risk Assessment.

• Budget Management.

• Monitoring.

Which of the following is considered a control activity under COSO's framework?

• Ethical culture.

• Segregation of duties.

• Internal audit reports.

• Compensation policies.

What is the primary role of an external auditor regarding internal control over financial reporting?

• To design the company's internal controls.

• To perform a daily assessment of the internal control system.

• To provide an opinion on the effectiveness of the internal controls.

• To train company personnel on control procedures.

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

• Segregation of duties for cash handling.

• A missing control over the authorization of vendor payments.

• Daily reconciliations of financial records.

• Quarterly financial reporting reviews.

In COSO's framework, which component refers to identifying, capturing, and communicating relevant information in a timely manner?

• Control Environment.

• Risk Assessment.

• Information and Communication.

• Monitoring.

Which of the following describes an entity-wide control?

• Reconciliation of bank accounts.

• Controls over the financial reporting process.

• Segregation of duties over cash receipts.

• Authorization procedures for purchasing.

Which of the following activities would indicate management override of controls?

• Authorization of transactions without approval.

• Timely recording of revenue.

• Independent review of financial statements.

• Regular board oversight of executive actions.

Which of the following is an example of monitoring in the COSO framework?

• Identifying internal risks.

• Periodic evaluations of control activities.

• Ensuring transactions follow segregation of duties.

• Setting policies related to risk management.

Which of the following best describes a material weakness in internal control?

• A significant deficiency that leads to a minor error.

• A control deficiency that results in a reasonable possibility of material misstatement.

• An isolated mistake in recording a financial transaction.

• A shortcoming in a control procedure that does not affect the financial statements.