Which of the following is correct about internal control?

One of the inherent limitations of accounting and internal control systems is the possibility
that the procedures may become inadequate due to changes in conditions, and compliance
with procedures may deteriorate.
Which of the following best describe the interrelated components of internal control?

Control environment, risk assessment, control activities, information and communication

systems, and monitoring.
An entity should consider the cost of a control in relationship to the risk. Which of the
following controls best reflects this philosophy for a large peso investment in heavy
machine tools?

Imprinting a controlled identification number on each tool

According to PSA 400, which of the following is correct regarding internal control
system?

In the audit of financial statements, the auditor is only concerned with those policies and
procedures within the accounting and internal control systems that are relevant to the
financial statements.

Corporate directors, management, external auditors, and internal auditors all play
important roles in creating a proper control environment. Top management is
primarily responsible for
Establishing a proper environment and specifying overall internal control.

A proper understanding of the client’s internal control is an integral part of the audit
planning process. The results of the understanding
May be used as the basis for withdrawing from an audit engagement.

Which of the following statements about internal control is correct?

The cost-benefit relationship should be considered in designing internal control.
In an audit of financial statements, an auditor’s primary consideration regarding a
control is whether it

Affects management’s financial statement assertions

Effective internal control

Reduces the need for management to review exception reports on a day-to-day basis.

The ultimate purpose of assessing control risk is to contribute to the auditor’s

evaluation of the risk that

Material misstatements may exist in the financial statements.

Midterms quiz 2

The first general standard requires that the audit of financial statements be
performed by a person or persons having adequate technical training and
Proficiency as an auditor, which likely has been acquired from previous experience.

Which of the following is mandatory if the auditor is to comply with generally

accepted auditing standards?
Possession by the auditor of adequate technical training.

Competence as a certified public accountant includes all of the following except

Warranting the infallibility of the work performed.

The standard of due audit care requires the auditor to

Apply judgment in a conscientious manner, carefully weighing the relevant factors before
reaching a decision.
In any case in which the CPA or the CPA’s assistants are not qualified to perform the
work, a professional obligation exists to

Any of the above

The general standards stress the importance of

The personal qualities which the auditor should have

Which of the following is not required by the Generally Accepted Auditing Standards
that states that due professional care is to be exercised in the performance of the
audit?
Responsibility for losses because of errors of judgment

The Audit Standard which requires “adequate technical training and proficiency” is
normally interpreted as requiring the auditor to have
All of the above

A CPA, while performing an audit, strives to achieve independence in appearance in

order to

Maintain public confidence in the profession.

An auditor who accepts an audit engagement and does not possess the industry
expertise of the business entity, should
obtain knowledge of matters that relate to the nature of the entity's business.