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