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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. Risk that the auditor is willing to take that the financial statements are not fairly stated after the quit
ERM: Top Down Approach Step 2
High Residual Risks
Internal Threat Analysis
Acceptable Audit Risk
2. 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
OBM
Step 1: Strategic Risk Analysis
Residual Risks
Control Risk
3. 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
Risk Identification
Control Risk
Process Maps
Assertions of Management
4. A process - management's responsibility - provides reasonable assurance to to inherent limitations (human failure - collusion - bypassing of control by senior management)
Attributes that influence effectiveness of control mechanism
Control Risk
ERM: Top Down Approach Steps per level
Internal Control attributes
5. Risk Assessment - Response by Management - Information Reliability - Performance Results - Reaction by Management
Internal Threat Analysis
Risk Management Process type
Risk Management Process
External Controls
6. Avoidance (of activities) - Acceptance (inevitable - unavoidable) - Insurance (transferred through assurance or risk sharing) - Reduction (by implementing proactive procedures-internal control)
Five Elements of Internal Control
Strategies for Managing Risk
Business Process Controls
Process Maps
7. 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
Internal Control Objectives
Internal Control
Acceptable Audit Risk
ERM: Risk
8. 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
External Threat Analysis
Internal Control auditors
Internal Control SOA requirements (management)
Risk Management Process
9. 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
Internal Control SOA requirements (auditor)
Internal Control SOA requirements (management)
Risk Identification
Residual Risks
10. Strategic Risk Analysis (external focus)
Internal Threat Analysis
ERM: Top Down Approach Step 1
Strategies for Managing Risk
Internal Control
11. Leadership - integrity - regulatory - technology - financial planning - human resource - operational - information
Risk Identification
Step 2: Process Risk Analysis
Planned Detection Risk
Risk Management Process type
12. 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 Mitigation
Components of ARM
Internal Control SOA requirements (auditor)
Step 3: Residual Risk Analysis
13. Identify Risks - Identify Management's Response - Asses Residual Risk (Separate What is and is not important)
External Controls
Step 3: Residual Risk Analysis
ERM: Top Down Approach Steps per level
Internal Control SOA requirements (management)
14. 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
Business Process Controls
Risk Monitoring
Management controls
Strategies for Managing Risk
15. Risk the auditor is willing to take that the audit procedures will fail to find material errors that were not detected by internal control
Planned Detection Risk
Limitations on Management Controls
Strategies for Managing Risk
Types of Evidence
16. Planned Detection Risk - Acceptable Audit Risk - Inherent Risk - Control Risk
Internal Control SOA requirements (management)
Components of ARM
Assertions of Management
Control Risk
17. The susceptibility of the financial statements to material error assuming no internal control
Internal Control auditors
OBM
Inherent Risk
Limitations on Management Controls
18. Competitive Environment - Management or Employee Improper or Incompetent Actions - Process Breakdowns Within Organization - Inaccurate Processing of Information
Sources of Risk
OBM
Strategies for Managing Risk
Risk Management Process
19. Authorization - Independent Checks on Performance - Separation of Duties - Physical Control of Assets and Records - Adequate Documents and Records
Internal Control auditors
Risk Management Process type
Business Process Controls
Residual Risks
20. 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)
Business Process Controls
Internal Control auditors
ERM: Top Down Approach Step 1
ERM: Top Down Approach Step 2
21. Assessment of whether a client's internal control structure is effective for preventing and/or detecting errors
Planned Detection Risk
Internal Control auditors
Residual Risks
Control Risk
22. Markets - Competitors(adv/dis) - Resources - Internal Processes - External Agents - Strategic Partners - low cost or diff - broad or narrow group of consumers
Residual Risks
ERM: Top Down Approach Steps per level
Management controls
OBM
23. Process designed by management to provide reasonable insurance - within economic limits - that the organization's objectives are being met
Internal Control SOA requirements (management)
Internal Control SOA requirements (auditor)
Process Maps
Internal Control
24. 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
Planned Detection Risk
Limitations on Management Controls
Residual Risks
Risk Identification
25. Control Environment - Risk Assessment - Control Activities - Information and Communication - Monitoring
ERM: Top Down Approach Step 2
Internal Control attributes
Five Elements of Internal Control
Sources of Risk
26. Identifies measures of performance to assess whether process risks are and immediate threat
Risk Mitigation
Five Elements of Internal Control
Business Process Controls
Risk Monitoring
27. Existence/Occurrence - Rights/Obligations - Valuation/Allocation - Completeness - Presentation/Disclosure
Assertions of Management
ERM: Top Down Approach Steps per level
Process Maps
Inherent Risk
28. Process Risk Analysis (internal focus)
OBM
Strategies for Managing Risk
ERM: Top Down Approach Step 2
Risk Identification
29. Residual Risk Analysis (linkage of risk to audit objectives)
ERM: Top Down Approach Step 3
Risk Monitoring
Risk Management Process
ERM: Risk
30. Diagnosticity - objectivity
High Residual Risks
Attributes that influence effectiveness of control mechanism
Risk Monitoring
Risk Identification
31. 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
Limitations on Management Controls
Step 2: Process Risk Analysis
ERM: Risk
Internal Control attributes
32. Assess the impact of process risks and the associated internal controls - Risk Identification - Risk Mitigation - Risk Monitoring
Risk Monitoring
Internal Threat Analysis
Risk Management Process
Acceptable Audit Risk
33. Its a systematic and continuous process. Risk management is iterative where control is temporary and depends on current circumstances - not a permanent condition
Internal Control attributes
Risk Management Process type
Step 3: Residual Risk Analysis
Internal Control SOA requirements (auditor)
34. Industry (competitors - potential entrants - substitutes - suppliers - customers) - Macro environmental Forces (Political - Economic - Social - Technological)
External Threat Analysis
Inherent Risk
Internal Control attributes
Risk Mitigation
35. Authorization(relates to ownership and existence) - Existence - Completeness - Accuracy (relates to valuation) - Timing (relates to completeness) - Posting and Summarization (relates to valuation)
Step 3: Residual Risk Analysis
Internal Threat Analysis
Step 2: Process Risk Analysis
Internal Control Objectives
36. Authorization - adequate documents and records - safeguarding of assets and records - independent checks on performance - separation of duties
Risk Mitigation
Types of Evidence
Planned Detection Risk
Step 3: Residual Risk Analysis
37. Control over the organization by individuals external to org(customers - suppliers - board of directors - regulatory agencies - external audits - owners)
Control Risk
ERM: Top Down Approach Step 3
Management controls
External Controls
38. 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
Process Maps
High Residual Risks
Risk Monitoring
Assertions of Management
39. Management Controls Systems over Management Processes - Business Process Control Systems over Business Processes
Internal Control SOA requirements (auditor)
Two Levels of Internal Controls
Risk Mitigation
Internal Control Objectives
40. 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
Limitations on Management Controls
Inherent Risk
Types of Evidence
ERM: Top Down Approach Step 3
41. Organizational Business Models - External Threat Analysis
Internal Control auditors
Step 1: Strategic Risk Analysis
External Threat Analysis
Sources of Risk