Final Review

Question 1

The tone at the top of a company is an aspect of which component of internal controls?

Accepted Answer

Control Environment

Question 2

Definition match: Where internal controls fail to detect or prevent and correct material misstatement in a timely manner

Accepted Answer

Material Weakness

Question 3

Sell-in means

Accepted Answer

No right of return and other conditions

Question 4

When interest rates rise, bond values fall

Accepted Answer

True

Question 5

What is one benefit of completing interim procedures?

Accepted Answer

Spread the Work

Question 6

Which of these statements is NOT true regarding employee fraud?

Accepted Answer

Auditor should assume employees lie and are fraudulent

Question 7

Insider Trading is an aspect of Employee/Management Fraud

Accepted Answer

True

Question 8

When looking for fraud, what should auditors keep an eye out for?

Accepted Answer

All of these are correct

Question 9

Auditors don&#x27;t need to control the confirmation process

Accepted Answer

False

Question 10

What does DSO stand for and what account is it most closely related to?

Accepted Answer

Days sales outstanding, Accounts Receivable

Question 11

Employee fraud involving cash is most common, followed by inventory

Accepted Answer

True

Question 12

Analytical procedures can be more powerful than test of details when testing revenue

Accepted Answer

True

Question 13

The three phases of evaluating internal controls do not include

Accepted Answer

Distribute Findings

Question 14

Risk assessment focusses on the identification of risks to management objectives and managment of that risk

Accepted Answer

True

Question 15

The sample size for test of details for substantive procedures related to revenue is based in part on RoMM.

Accepted Answer

True

Question 16

Which of these is not one of the three main fraud elements

Accepted Answer

Money

Question 17

Supporting documents for test of details for substantive procedures related to revenue include which of the following?

Accepted Answer

All of the above

Question 18

When you have a purchase order without the quantity on it, it is called a

Accepted Answer

Blind purchase order

Question 19

In searching for unrecorded liabilities when completing substantive testing which is NOT something subsequently checked?

Accepted Answer

Cash received

Question 20

A significant deficiency could result in a material misstatement

Accepted Answer

False

Question 21

The two broad categories of internal contols are

Accepted Answer

Entity-level & Process-level

Question 22

SVB sold some of its bonds at losses because it didn&#x27;t have enough cash on hand to pay off its customers

Accepted Answer

True

Question 23

Fill in the blank: "Misstating ____ & _______ is a major cause of restatment"

Accepted Answer

Costs; expenses

Question 24

Which of the following is NOT a reason why cash confirmation failed in regards to Satyam?

Accepted Answer

It&#x27;s a bad control

Question 25

Which of these is not a source of information when identifying inherent risk?

Accepted Answer

Second hand accounts from employees

Question 26

Which of the following is NOT true about segregation of duties?

Accepted Answer

Increases the likelihood of fraud

Question 27

An auditor does not need to control the cash confirmation process

Accepted Answer

False

Question 28

Tracing confirms the completeness assertion

Accepted Answer

True

Question 29

What are the different types of confirmation?

Accepted Answer

Positive, Negative

Question 30

When trying to understand a company&#x27;s internal controls what kind of approach is commonly used?

Accepted Answer

Top-down approach

Question 31

The 3-way match provides evidence for valuation

Accepted Answer

False

Question 32

When a company oversells to a distributor in order to recognize more revenue, it&#x27;s called,

Accepted Answer

Channel stuffing

Question 33

Lapping invloves

Accepted Answer

Avoiding detection

Question 34

Cash does NOT impact many processes

Accepted Answer

False

Question 35

The following are part of the 5 components of internal controls EXCEPT:

Accepted Answer

Enforcement

Question 36

A negative confirmation requires a customer to respond only if they disagree with the amount owed

Accepted Answer

True

Question 37

Looking at accounts receivable aging is an example of a detective control

Accepted Answer

True

Question 38

Aspects of fraud prevention under the control environment include,

Accepted Answer

Tone at the top, Hotline

Question 39

All of the following are true statements about operating effectiveness EXCEPT

Accepted Answer

Is more important than design effectiveness

Question 40

Kiting involves

Accepted Answer

Transferring cash from one bank to another

Question 41

Balanced judgement and a questioning mind are two aspects of

Accepted Answer

Professional Skepticism

Question 42

If the control risk is high, then we want higher sample size

Accepted Answer

True

Question 43

Effective transaction level controls can be a strong deterrent of fraud

Accepted Answer

True

Question 44

A 3-way match often includes a purchase order, invoice, and shipping documents

Accepted Answer

True

Question 45

Fill in the blank: "Round Trip" fraud involves inflating ____

Accepted Answer

Revenue

Question 46

The assertions which are satisfied by cash confirmation are

Accepted Answer

existence, rights

Question 47

Alternate procedures for non-response for AR confirmation include looking for subsequent cash collection.

Accepted Answer

True

Question 48

Which of the following was involved in Insider Trading

Accepted Answer

Rajat Gupta

Question 49

Fill in the blank : Internal Controls are the responsibility of ________

Accepted Answer

Management

Question 50

A potential control to prevent channel stuffing is to test Days of inventory on hand

Accepted Answer

True

Question 51

A 3-way match is one type of commonly used internal control

Accepted Answer

True

Question 52

Tracing provides evidence of completeness

Accepted Answer

True

Question 53

Auditors primarily care about controls in

Accepted Answer

Financial Reporting

Question 54

Which of the following is NOT an assertion cut-off testing supports?

Accepted Answer

Valuation

Question 55

Significant deficiencies are externally disclosed

Accepted Answer

False

Question 56

Material weaknesses don&#x27;t need to be disclosed externally

Accepted Answer

False

Question 57

The statement of cash flows shows the true state of a company

Accepted Answer

True

Question 58

It is generally assumed that an auditor will NOT perform AR confirmation

Accepted Answer

False

Question 59

Fill in the blank : Significant deficiencies must be disclosed ____

Accepted Answer

Internally

Question 60

All of the following are some of the most common forms of evidence used in the revenue & collection cycle EXCEPT

Accepted Answer

SEC Filings

Question 61

A bank run is one of the reasons for the collapse of the SVB Bank

Accepted Answer

True

Question 62

How many components of Internal Controls are there?

Accepted Answer

5

Question 63

Fill in the blank : The SoX act made ____ responsible for documentation

Accepted Answer

Management

Question 64

Which assertion does AR aging support?

Accepted Answer

Valuation

Final Review

Questions 73

Final Review

Questions 73