Which of the following best describes the primary purpose of an internal control system?

Which component of internal control sets the tone at the top and provides the foundation for the other components?

Policies and procedures that help ensure management directives are carried out are called:

Monitoring of internal control may be performed through:

Which of the following is a common key issue for internal control in smaller entities?

Which limitation of internal control is described when the cost of implementing a control is greater than the expected benefit?

An auditor uses a walk-through test primarily to:

Which technique records the accounting and control system in narrative form and is flexible but often time-consuming?

Which technique is useful for highlighting salient points of control and deficiencies but is difficult to amend without redrawing?

A disadvantage of internal control questionnaires (ICQs) and internal control evaluation questionnaires (ICEQs) is that they:

If internal controls appear strong, the auditor will generally:

The auditor would test internal controls to gather audit evidence only when:

In a computerized environment, controls over development of computer applications, prevention/detection of unauthorized program changes, testing/documentation of changes, and continuity of operation are examples of:

Controls over input, processing, and master files/standing data are classified as:

Which of the following is a limitation of internal control?

The control environment includes:

The risk assessment process in internal control is best described as:

The information and communication component of internal control includes:

Why might an auditor of a smaller entity rely more on substantive procedures?

Which of the following is NOT a technique used to record accounting and control systems?

Internal control provides reasonable assurance, not absolute assurance, about the achievement of an entity's objectives.

The control environment provides an appropriate foundation for the other components of internal control.

Control activities are the attitudes and actions of management rather than policies and procedures.

Monitoring includes ongoing management activities and separate evaluations, which may be performed by internal audit.

In smaller entities, there is usually more segregation of duties than in larger entities.

Management override of controls is one of the limitations of an internal control system.

A well-designed internal control system can provide absolute assurance that all errors and fraud are prevented.

A walk-through test involves tracing a transaction through the system to confirm whether expected controls actually operate.

Flowcharts are always easy to update when a system changes because they require no redrawing.

Internal control questionnaires may fail to include unusual controls specific to a client's industry.

If tests of controls support the initial assessment that controls are effective, the auditor may reduce substantive procedures.

The auditor tests internal controls only when the controls are assessed as weak.

General controls in a computerized environment include controls to prevent unauthorized changes to programs.

Information processing controls include controls over the development of computer applications.

The cost of a control should not exceed its expected benefit.

Understanding the internal control system helps the auditor assess the adequacy of the accounting system and identify types of potential misstatements.

Internal control evaluation questionnaires (ICEQs) are generally easier to apply to a variety of systems than internal control questionnaires (ICQs).

When internal controls are strong, the auditor may perform reduced substantive procedures.

Human error, deliberate circumvention by employees, and unforeseen circumstances are limitations of internal control.

In a computerized environment, controls over input are classified as general controls.