Audit MCQ Practice - 8 internal controlAudit MCQ Practice - 8 internal control.docVIP

Chapter 10 Multiple-Choice Questions 1. Which of the following is responsible for establishing a private company’s internal control? easy a. Management. a b. Auditors. c. Management and auditors. d. Committee of Sponsoring Organizations. 2. Which of the following is not one of the three primary objectives of effective internal control? easy a. Reliability of financial reporting d b. Efficiency and effectiveness of operations c. Compliance with laws and regulations d. Assurance of elimination of business risk. 3. (Public) The Public Company Accounting Oversight Board states that reasonable assurance allows a: easy a. small likelihood of ineffective internal controls. b b. remote likelihood that material misstatements will not be prevented or detected by internal control. c. likelihood that material misstatements will not be prevented or detected by internal control. d. high likelihood that material misstatements will not be prevented or detected by internal control. 4. easy Two key concepts that underlie management’s design and implementation of internal control are: c a. costs and materiality. b. absolute assurance and costs. c. inherent limitations and reasonable assurance. d. collusion and materiality. 5. Internal controls can never be considered as absolutely effective because: easy a. their effectiveness is limited by the competency and dependability of employees. a b. not all organizations have internal audit departments. c. controls are designed to prevent and detect only material misstatements. d. internal controls prevent separation of duties. 6. A major control available in a small company, which might not be feasible in a big company, is: easy a. a wider segregation of duties. d b. a voucher system. c. fewer transactions to process. d. the owner-manager’s personal interest and close relationship with personnel. 7. (Public) Which of the following is responsible for establishing internal c