Question 1

A(n)________ over financial reporting requires the auditor to conduct tests of controls to obtain evidence that internal control over financial reporting has operated effectively.

Accepted Answer

The answer of A(n)________ over financial reporting requires the auditor...

Question 2

The internal control category control environment includes identifying, analyzing, and managing risks affecting the ability to report financial data properly.

Accepted Answer

The control environment is the foundation of the internal control system, focusing on the organization's culture, values, and environment that influence the effectiveness of internal controls. Identifying, analyzing, and managing risks is part of the risk assessment process, a separate component of internal control.

Question 3

The Sarbanes-Oxley Act of 2002, which would become known as SOX, created the ________ to oversee and regulate public companies and their auditors.

Accepted Answer

The answer of The Sarbanes-Oxley Act of 2002, which would...

Question 4

A(n)________ in internal control over financial reporting is defined as a deficiency as such that there is a reasonable possibility that a material misstatement of financial statements will not be prevented or detected in a timely basis.

Accepted Answer

The answer of A(n)________ in internal control over financial reporting...

Question 5

Internal control is designed to provide reasonable assurance regarding the achievement of objectives in effectiveness and efficiency of operations, reliability of financial reporting, and compliance with applicable laws and regulations.

Accepted Answer

Internal control is indeed designed to provide reasonable assurance regarding the achievement of objectives in effectiveness and efficiency of operations, reliability of financial reporting, and compliance with applicable laws and regulations.

Question 6

Which organization was created by the Sarbanes-Oxley Act of 2002?
A)Public Company Accounting Oversight Board (PCAOB)
B)Institute of Management Accountants (IMA)
C)Security and Exchange Commission (SEC)
D)Committee of Sponsoring Organizations of the Treadway Commission (COSO)

Accepted Answer

The Public Company Accounting Oversight Board (PCAOB) was created by the Sarbanes-Oxley Act of 2002 to regulate auditing firms that audit publicly traded companies.

Question 7

The COSO ________ provides a blueprint for implementing an internal control system to assist in ensuring the reliability of financial statements and compliance with Sarbanes-Oxley legislation.

Accepted Answer

The answer of The COSO ________ provides a blueprint for...

Question 8

When investigating fraud, ________ enables auditors to extract, analyze, and interpret evidence to detect unusual patterns and irregularities.

Accepted Answer

The answer of When investigating fraud, ________ enables auditors to...

Question 9

In a(n)________, the auditor performs tests of controls and substantive procedures.

Accepted Answer

The answer of In a(n)________, the auditor performs tests of...

Question 10

In control activities, ________ divide authorization, recording, and asset custody among different individuals.

Accepted Answer

The answer of In control activities, ________ divide authorization, recording,...

Question 11

For internal control to be effective, an organization needs ________ with internal controls.

Accepted Answer

The answer of For internal control to be effective, an...

Question 12

SOX section 404 requires requires each annual report of a publicly traded company to contain an internal control report to contain a assessment of the effectiveness of the company's internal control structure and procedures.

Accepted Answer

This statement accurately reflects the requirements of Section 404 of the Sarbanes-Oxley Act.

Question 13

What does Auditing Standard No. 5, an Audit of Internal Control Over Financial Reporting That Is Integrated with an Audit of Financial Statements, require the auditor to understand about IT?

Accepted Answer

The answer of What does Auditing Standard No. 5, an...

Question 14

SOX section 906 requires corporate management to certify reports filed with the SEC.

Accepted Answer

SOX section 906 requires corporate management, including the CEO and CFO, to certify the accuracy of financial statements and other reports filed with the SEC.

Question 15

Which SOX section requires the chief executive officer and the chief financial officer to disclose to the auditors and the audit committee of the board of directors all significant deficiencies in internal controls, which could adversely affect the ability to record, process, summarize, and report financial data and any material weaknesses in internal controls?
A)Section 806. Protection for Employees of Publicly Traded Companies Who Provide Evidence of Fraud
B)Section 404. Management Assessment of Internal Controls
C)Section 906. Corporate Responsibility for Financial Reports
D)Section 302. Corporate Responsibility for Financial Reports

Accepted Answer

Section 302 of the Sarbanes-Oxley Act requires the CEO and CFO to certify the accuracy of financial reports and disclose any significant deficiencies or material weaknesses in internal controls to the auditors and the audit committee.

Question 16

Which SOX section requires the public accounting firm that audits the financial statements of the company to issue an attestation report regarding the effectiveness of the company's internal controls?
A)Section 806. Protection for Employees of Publicly Traded Companies Who Provide Evidence of Fraud
B)Section 404. Management Assessment of Internal Controls
C)Section 906. Corporate Responsibility for Financial Reports
D)Section 302. Corporate Responsibility for Financial Reports

Accepted Answer

Section 404 of the Sarbanes-Oxley Act requires the management of public companies to assess and report on the effectiveness of their internal control over financial reporting. Additionally, it requires the company's external auditor to issue an attestation report on the effectiveness of the company's internal controls.

Question 17

A(n)________, as required by Auditing Standard No. 5, integrates an audit of internal control with an audit of financial statements.

Accepted Answer

The answer of A(n)________, as required by Auditing Standard No....

Question 18

What is SOX?

Accepted Answer

The answer of What is SOX?...

Question 19

Which audit type requires the auditor to conduct tests of controls to obtain evidence that internal control over financial reporting has operated effectively?
A)Audit of financial reporting control
B)Audit of financial statements
C)Audit of internal control
D)IT audit

Accepted Answer

An audit of internal control requires the auditor to conduct tests of controls in order to obtain evidence that internal control over financial reporting has operated effectively.

Question 20

For internal control to be effective, an organization needs stated ________ and ________ for internal controls.

Accepted Answer