INTERNAL CONTROL
1. Tests of control are not concerned with_ a) Existence of controls b) Effectiveness of controls c) Continuity of controls d) Designing of controls
2. The sequence of steps in the auditor's consideration of internal control is as follows - a) Obtain an understanding, design substantive test, perform tests of control, make a preliminary assessment of control risk b) Design substantive tests, obtain an understanding, perform tests of control, make a preliminary assessment of control risk c) Obtain an understanding, make a preliminary assessment of control risk, perform tests of control, design substantive procedures. d) Perform tests of control, obtain and understanding, make a preliminary assessment of control risk, design
3. Which of the following is not an inherent limitation of internal control system? a) Management override b) Collusion among employees c) Inefficiency of internal auditor d) Abuse of authority
4. An auditor should study and evaluate internal controls to a) determine whether assets are safeguarded b) Suggest improvements in internal control c) Plan audit procedures d) express and opinion
5. XYZ Ltd. Conducts quarterly review of operations. It discovers that unrest in a south east Asian country may affect the supply of raw materials to it the next quarter. This is an example of : a) risk assessment b) control procedure c) supervision d) control environment
6. The primary purpose of performing tests of control is to provide reasonable assurance that_ a) there are no material misstatements due to fraud or error in financial statement b) accounting system is well documented c) Written evidence is there to support transactions d) if internal control is effective
7. If the auditor assesses control risk as high.... a) Document the conclusions b) documents the reasons along with conclusions c) perform tests of control d) perform walk through tests
8. The overall attitude and awareness of an entity's board of directors concerning the importance of internal control is reflected in a) accounting controls b) control environment c) control procedures d) supervision
9. Which of the following are included in test of control? a) Reperformance and observation b) Inquiry and analytical procedures c) Comparison and conformation d) Inspection and verification
10.Control risk is assessed at a) Overall financial statements level b) Fraud risk factor level c) Financial statement assertion level d) Control environment level