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Test your basic knowledge |
Auditing
Start Test
Study First
Subject
:
business-skills
Instructions:
Answer 41 questions in 15 minutes.
If you are not ready to take this test, you can
study here
.
Match each statement with the correct term.
Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.
This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. The susceptibility of the financial statements to material error assuming no internal control
Risk Identification
Inherent Risk
Internal Threat Analysis
High Residual Risks
2. Diagnosticity - objectivity
Internal Control
Strategies for Managing Risk
Sources of Risk
Attributes that influence effectiveness of control mechanism
3. A process - management's responsibility - provides reasonable assurance to to inherent limitations (human failure - collusion - bypassing of control by senior management)
External Controls
Internal Control attributes
Limitations on Management Controls
Attributes that influence effectiveness of control mechanism
4. Activities performed by senior management including strategic direction and planning and evaluating the overall performance of the organization by providing feedback about potential problems or risks that should be addressed
Internal Control
Internal Control SOA requirements (auditor)
Management controls
OBM
5. Failure to communicate mission and objectives - Inaccurate or out of date assumptions - Undue focus on current conditions - Rigid organizational structure - Failure to enforce accountability - Communication breakdowns
Business Process Controls
Limitations on Management Controls
ERM: Top Down Approach Step 2
Internal Control
6. Markets - Competitors(adv/dis) - Resources - Internal Processes - External Agents - Strategic Partners - low cost or diff - broad or narrow group of consumers
OBM
Step 3: Residual Risk Analysis
Control Risk
Process Maps
7. Assess the impact of process risks and the associated internal controls - Risk Identification - Risk Mitigation - Risk Monitoring
Risk Identification
High Residual Risks
Management controls
Internal Threat Analysis
8. Strategic Risk Analysis (external focus)
ERM: Top Down Approach Step 1
Risk Mitigation
Step 2: Process Risk Analysis
ERM: Risk
9. Control over the organization by individuals external to org(customers - suppliers - board of directors - regulatory agencies - external audits - owners)
External Controls
Process Maps
High Residual Risks
Types of Evidence
10. Documentation or Inspection of Records and Documents -Observation -Physical Examination or Inspection of Tangible Assets -Client Inquiry (do not use Independent Inquiry) -Confirmation -Recalculation and Reperformance -Analytical Procedures
Risk Management Process type
Internal Control
Types of Evidence
Strategies for Managing Risk
11. Pinpoints problems that show up in financial results - may suggest financial misstatements - may raise concerns about the viability of the company - may indicate a potential threat to the internal control environment - may highlight potential client
Planned Detection Risk
ERM: Top Down Approach Step 3
High Residual Risks
OBM
12. Leadership - integrity - regulatory - technology - financial planning - human resource - operational - information
Two Levels of Internal Controls
Risk Identification
Management controls
Internal Control SOA requirements (management)
13. Identify Risks - Identify Management's Response - Asses Residual Risk (Separate What is and is not important)
Management controls
Strategies for Managing Risk
Step 2: Process Risk Analysis
ERM: Top Down Approach Steps per level
14. Industry (competitors - potential entrants - substitutes - suppliers - customers) - Macro environmental Forces (Political - Economic - Social - Technological)
Two Levels of Internal Controls
Internal Control auditors
External Threat Analysis
Management controls
15. Responsible for giving an opinion of management's report on internal control - and must assess if the client's internal controls being used to effectively control risks
Acceptable Audit Risk
Internal Control SOA requirements (auditor)
Internal Control Objectives
High Residual Risks
16. Authorization(relates to ownership and existence) - Existence - Completeness - Accuracy (relates to valuation) - Timing (relates to completeness) - Posting and Summarization (relates to valuation)
Internal Control auditors
Acceptable Audit Risk
Internal Control Objectives
ERM: Top Down Approach Step 1
17. Control Environment - Risk Assessment - Control Activities - Information and Communication - Monitoring
Types of Evidence
Step 1: Strategic Risk Analysis
Five Elements of Internal Control
Two Levels of Internal Controls
18. Authorization - Independent Checks on Performance - Separation of Duties - Physical Control of Assets and Records - Adequate Documents and Records
Risk Mitigation
Types of Evidence
Business Process Controls
Limitations on Management Controls
19. Auditors primary concern - most likely source of problems - reflect current conditions of threats - reflect areas where the auditor needs to focus most of auditing efforts
Residual Risks
Sources of Risk
Step 1: Strategic Risk Analysis
Control Risk
20. Assessment of whether a client's internal control structure is effective for preventing and/or detecting errors
Step 1: Strategic Risk Analysis
Risk Identification
Control Risk
External Controls
21. Risk Assessment - Response by Management - Information Reliability - Performance Results - Reaction by Management
Risk Management Process
Five Elements of Internal Control
External Controls
Risk Management Process type
22. Most of the reference to risk concerns the company's risk of survival and includes any threat to an organization that reduces the likelihood that the organization will achieve one or more of its objectives. It is measured in terms of probability (lik
Management controls
Process Maps
Attributes that influence effectiveness of control mechanism
ERM: Risk
23. Process Objectives(statement of what the process is trying to achieve) - Process Activities(reflect actions and steps performed to accomplish process objectives) - Process Data Streams(Information need and outputs of the process) - Accounting Impact
Internal Control auditors
Process Maps
Control Risk
Strategies for Managing Risk
24. Must state their responsibilities for establishing and maintaining internal controls and report on an evaluation of effectiveness of the controls within 90 days prior to periodic reports - state that signing officers have disclosed to auditors and c
Inherent Risk
Acceptable Audit Risk
Internal Control SOA requirements (auditor)
Internal Control SOA requirements (management)
25. Competitive Environment - Management or Employee Improper or Incompetent Actions - Process Breakdowns Within Organization - Inaccurate Processing of Information
Sources of Risk
Internal Threat Analysis
Risk Management Process
Internal Control
26. Its a systematic and continuous process. Risk management is iterative where control is temporary and depends on current circumstances - not a permanent condition
Risk Management Process type
Internal Control SOA requirements (management)
Sources of Risk
ERM: Top Down Approach Step 2
27. Residual Risk Analysis (linkage of risk to audit objectives)
ERM: Top Down Approach Step 3
Internal Control SOA requirements (auditor)
Components of ARM
Acceptable Audit Risk
28. Process Risk Analysis (internal focus)
ERM: Top Down Approach Step 2
Components of ARM
Limitations on Management Controls
Residual Risks
29. Assess probability of the event happening and potential damage - Consider whether internal controls have mitigated the inherent problems of the risk - Identify the high residual risks that will be major focus of audit
Risk Monitoring
Types of Evidence
Step 3: Residual Risk Analysis
Internal Threat Analysis
30. Existence/Occurrence - Rights/Obligations - Valuation/Allocation - Completeness - Presentation/Disclosure
Assertions of Management
ERM: Risk
Risk Mitigation
Business Process Controls
31. Authorization - adequate documents and records - safeguarding of assets and records - independent checks on performance - separation of duties
Internal Control attributes
Inherent Risk
Planned Detection Risk
Risk Mitigation
32. Avoidance (of activities) - Acceptance (inevitable - unavoidable) - Insurance (transferred through assurance or risk sharing) - Reduction (by implementing proactive procedures-internal control)
Planned Detection Risk
Residual Risks
ERM: Risk
Strategies for Managing Risk
33. Planned Detection Risk - Acceptable Audit Risk - Inherent Risk - Control Risk
Inherent Risk
ERM: Top Down Approach Steps per level
Components of ARM
Step 2: Process Risk Analysis
34. Examine internal control as part of audit process to determine reliability of info processing related to transactions - and to access control risk involving (management decision making - process monitoring - compliance)
Attributes that influence effectiveness of control mechanism
Risk Mitigation
Internal Control auditors
Types of Evidence
35. Risk the auditor is willing to take that the audit procedures will fail to find material errors that were not detected by internal control
ERM: Risk
External Threat Analysis
Internal Threat Analysis
Planned Detection Risk
36. Process designed by management to provide reasonable insurance - within economic limits - that the organization's objectives are being met
Step 3: Residual Risk Analysis
Risk Monitoring
ERM: Top Down Approach Steps per level
Internal Control
37. Process Map(outlines each process) - Internal Threat Analysis(analyze each process) - Process(an organized unit within the company that has to accomplish a goal set by management) - Audit-Sensitive Processes(based on assessment auditor identifies cri
Step 2: Process Risk Analysis
Internal Control auditors
Inherent Risk
Step 1: Strategic Risk Analysis
38. Organizational Business Models - External Threat Analysis
Internal Control SOA requirements (auditor)
Planned Detection Risk
Residual Risks
Step 1: Strategic Risk Analysis
39. Management Controls Systems over Management Processes - Business Process Control Systems over Business Processes
Five Elements of Internal Control
Risk Mitigation
Two Levels of Internal Controls
Risk Identification
40. Risk that the auditor is willing to take that the financial statements are not fairly stated after the quit
ERM: Top Down Approach Step 3
ERM: Top Down Approach Steps per level
Business Process Controls
Acceptable Audit Risk
41. Identifies measures of performance to assess whether process risks are and immediate threat
Risk Monitoring
Step 2: Process Risk Analysis
Risk Mitigation
Residual Risks