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