1.

Correct Internal controls are grouped into the following categories:

Your Answer:

Effective operations, financial reporting, and compliance.

2.

Correct Which of the following makes for an effective control environment with regards to commitment
to competence?

Your Answer:

Its culture is one in which quality and competence are openly valued.

3.

Correct To determine a positive control environment, the auditor should consider which of the following
control environment actions for integrity and ethical values?

Your Answer:

Remove incentives and temptations that prompt personnel to engage in fraudulent or unethical
behaviour.

4.

Correct That companies must comply with many laws and regulations including company law, tax law
and environmental protection regulations requires what category of internal control objectives?

Your Answer:
Compliance.

5.

Correct The most emphasis by auditors is placed on understanding which of the following types of
controls?

Your Answer:

Controls over classes of transactions.

6.

Incorrect All of the following are sub-systems (contents) of an entity’s information system except:

Your Answer:

Production system.

Correct Answer:

Personnel information.

7.

Correct Which of the following is not one of the components of internal control according to COSO?

Your Answer:

Communication processes related to stakeholders.

8.
Incorrect US Securities Exchange Commission rules require that management must base its
evaluation of the effectiveness of the company's internal control over financial reporting on a suitable,
recognised control framework:

Your Answer:

Based on SEC ethics and conduct.

Correct Answer:

Established by a body or group that followed due-process procedures.

9.

Correct The auditor's primary consideration is whether, and how, a specific control prevents, or detects
and corrects, material misstatements:

Your Answer:

In classes of transactions, account balances or disclosures.

10.

Incorrect Implementation of a control means that the control exists and that:

Your Answer:

All necessary personnel are trained to operate the control.

Correct Answer:

The entity is using it.

11.
Correct Obtaining audit evidence about the design and implementation of relevant controls may involve
all of the following except:

Your Answer:

Performing analytical procedures.

12.

Incorrect All the following describe internal control, according to COSO, except:

Your Answer:

It is a process effected by people.

Correct Answer:

It is designed to provide reasonable assurance regarding the achievement of objectives of compliance

with capital structure strategy.

13.

Incorrect The auditor’s primary consideration is whether, and how, a specific control prevents, or
detects and corrects:

Your Answer:

Financial statement fraud.

Correct Answer:

Material misstatements in classes of transactions, account balances or disclosures.

14.
Correct All of the following are components of internal control except:

Your Answer:

Management reports.

15.

Incorrect There are a number of specific elements that usually contribute to a successful control
environment and which may be used as indicators of the quality of the control environment of a
particular organisation. Which of the following is not one of these elements?

Your Answer:

Human resource policies and practices.

Correct Answer:

Segregation of duties in management.

16.

Correct Which of the following are not general IT controls?

Your Answer:

Edit checks of input data.

17.

Incorrect Which of the following are not application controls?

Your Answer:
Chart of accounts.

Correct Answer:

Access security.

18.

Correct Which of the following is not true about the risk assessment component of the COSO internal
control framework?

Your Answer:

How responsibility is distributed is usually spelled out in formal company policy manuals.

19.

Incorrect Which of the following is an example of adequate documents?

Your Answer:

Use of serial numbers on documents and input transactions.

Correct Answer:

Preformatted input screens in a CIS.

20.

Correct Segregation of duties means what fundamental functions which must be separated and
adequately supervised?

Your Answer:
Recording, authorisation, and custody.

21.

Incorrect Soft controls are the intangible factors in an organisation that influence the behaviour of
managers and employees. Which of the following is not a factor that influences the way people examine
their control activities?

Your Answer:

Openness to discussion of viewpoints, emotions, dilemmas and transgressions.

Correct Answer:

The objective of profit maximisation.

22.

Correct The preliminary assessment of control risk includes all the following procedures except:

Your Answer:

Identify possible liabilities which may arise.