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 Failure to communicate mission and objectives - Inaccurate or out of date assumptions - Undue focus on current conditions - Rigid organizational structure - Failure to enforce accountability - Communication breakdowns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