Internal control structure cannot be designed to provide reasonable assurance that
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Show Auditors obtain an understanding of an entity’s internal control for the primary purpose of: An auditor’s primary consideration regarding an entity’s internal controls is whether they Which of the following statements about internal control is correct? Internal controls are designed to achieve company objectives in all of the following areas except: Internal control is a process designed to provide reasonable assurance regarding the achievement of which objective? Which of the following is not one of the five major components of internal control? Monitoring is a major component of the COSO Internal Control—Integrated Framework. Which of the following is not correct in how the company can implement the monitoring component? Which of the following is a proper reason for not conducting tests of controls? After obtaining an understanding of an entity’s internal control system, an auditor may set control risk at high for some assertions because he or she Regardless of the assessed level of control risk, an auditor would perform some With preliminary control risk assessments set at high, auditors are likely to: Which of the following represents the correct sequence of audit steps that come after first obtaining an understanding and documenting the entity’s internal control? A reliance strategy is chosen when the auditor: Understanding each of the components of internal control provides knowledge about: The effectiveness of internal control is reduced by: Which of the following statements regarding auditor documentation of the entity’s internal control is correct? In order to be able to set control risk at a lower level, the auditor must do all of the following except: Assessing control risk below high involves all of the following except Which of the following audit techniques would most likely provide an auditor with the most assurance about the effectiveness of the operation of a control? The highest-quality and most reliable audit evidence that segregation of duties is properly implemented is obtained by An auditor may need to obtain a service auditor’s report when an entity receives accounting services such as payroll from a service organization. Which of the following statements is true regarding this service audit report? Type 2 reports by the service organization’s auditor typically Significant deficiencies in internal control are matters that come to an auditor’s attention that should be communicated to those charged with governance because they represent A primary advantage of using generalized audit software packages to audit the financial statements of an entity that uses an IT system is that the auditor may Which of the following is not considered a general control? An auditor anticipates assessing control risk at a low level in an IT environment. Under these circumstances, on which of the following controls would the auditor initially focus? An auditor’s flowchart of an entity’s accounting system is a diagrammatic representation that depicts the auditor’s Why internal control is reasonable assurance?Internal control is a process, effected by an entity's board of directors, management and other personnel, designed to provide reasonable assurance: That information is reliable, accurate and timely. Of compliance with applicable laws, regulations, contracts, policies and procedures.
Why internal controls provide reasonable assurance and not absolute assurance?The exercise of due professional care allows the auditor to obtain reasonable assurance that the financial statements are free of material misstatement, whether caused by error or fraud. Absolute assurance is not attainable because of the nature of audit evidence and the characteristics of fraud.
What are three major limitations of internal control?Three of these limitations are human error, overriding aspects of internal controls, and collusion.
What are two limitations of internal control?Limitations of Internal Controls:
These include: Judgment: The effectiveness of controls will be limited by decisions made with human judgment under pressures to conduct business based on the information at hand. Breakdowns: Even well designed internal controls can break down.
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