Study Unit 14: Internal Controls -- Controls and Security Measures
14: (151) Internal Controls -- Controls and Security Measures
1: (77) Control Procedures
2: (54) Systems Controls and Information Security
3: (20) Security Measures and Business Continuity Planning
Subunit 1: Control Procedures
Question: 1Internal controls may be preventive, detective, corrective, or directive. Which of the following is
preventive?
A. Requiring two persons to open mail.
B. Reconciling the accounts receivable subsidiary file with the control account.
C. Using batch totals.
D. Preparing bank reconciliations.
Question: 2The procedure requiring preparation of a prelisting of incoming cash receipts, with copies of the
prelist going to the cashier and to accounting, is an example of which type of control?
A. Preventive.
B. Corrective.
C. Detective.
D. Directive.
Question: 3A proper segregation of duties requires that an individual
A. Authorizing a transaction records it.
B. Authorizing a transaction maintain custody of the asset that resulted from the transaction.
C. Maintaining custody of an asset be entitled to access the accounting records for the asset.
D. Recording a transaction not compare the accounting record of the asset with the asset itself.
ﻛﻝ ﺍﻟﻛﺗﺏ ﻭﺍﻻﺳﺋﻠﻪ ﺍﻟﻠﻲ ﺗﺣﺗﺎﺟﻭﻫﺎ ﺣﺗﻼﻗﻭﻫﺎ ﻋﻠﻰ ﺍﻟﻘﻧﺎﺗﻳﻥ ﺩﻭﻝ
https://t.me/CMA_part1 https://t.me/CMA_part2
, Question: 4In a well-designed internal control structure in which the cashier receives remittances from the mail
room, the cashier should not
A. Endorse the checks.
B. Prepare the bank deposit slip.
C. Deposit remittances daily at a local bank.
D. Post the receipts to the accounts receivable subsidiary ledger cards.
Question: 5Accounting controls are concerned with the safeguarding of assets and the reliability of financial
records. Consequently, these controls are designed to provide reasonable assurance that all of the following take
place except
A. Permitting access to assets in accordance with management’s authorization.
B. Executing transactions in accordance with management’s general or specific authorization.
C. Compliance with methods and procedures ensuring operational efficiency and adherence to managerial
policies.
D. Comparing recorded assets with existing assets at periodic intervals and taking appropriate action with
respect to differences.
Question: 6One characteristic of an effective internal control structure is the proper segregation of duties. The
combination of responsibilities that would not be considered a violation of segregation of functional responsibilities
is
A. Signing of paychecks and custody of blank payroll checks.
B. Preparation of paychecks and check distribution.
C. Approval of time cards and preparation of paychecks.
D. Timekeeping and preparation of payroll journal entries.
Question: 7Auditors document their understanding of internal control with questionnaires, flowcharts, and
narrative descriptions. A questionnaire consists of a series of questions concerning controls that auditors consider
necessary to prevent or detect errors and fraud. The most appropriate question designed to contribute to the auditors’
understanding of the completeness of the expenditure (purchases-payables) cycle concerns the
A. Internal verification of quantities, prices, and mathematical accuracy of sales invoices.
B. Use and accountability of prenumbered checks.
ﻛﻝ ﺍﻟﻛﺗﺏ ﻭﺍﻻﺳﺋﻠﻪ ﺍﻟﻠﻲ ﺗﺣﺗﺎﺟﻭﻫﺎ ﺣﺗﻼﻗﻭﻫﺎ ﻋﻠﻰ ﺍﻟﻘﻧﺎﺗﻳﻥ ﺩﻭﻝ
https://t.me/CMA_part1 https://t.me/CMA_part2
, C. Disposition of cash receipts.
D. Qualifications of accounting personnel.
Question: 8Organizational independence is required in the processing of customers’ orders in order to maintain
an internal control structure. Which one of the following situations is not a proper separation of duties in the
processing of orders from customers?
A. Approval by Credit Department of a sales order prepared by the Sales Department.
B. Shipping of goods by the Shipping Department that have been retrieved from stock by the Finished
Goods Storeroom Department.
C. Invoice preparation by the Billing Department and posting to customers’ accounts by the Accounts
Receivable Department.
D. Approval of a sales credit memo because of a product return by the Sales Department with subsequent
posting to the customer’s account by the Accounts Receivable Department.
Question: 9Which one of the following situations represents an internal control weakness in the payroll
department?
A. Payroll department personnel are rotated in their duties.
B. Paychecks are distributed by the employees’ immediate supervisor.
C. Payroll records are reconciled with quarterly tax reports.
D. The timekeeping function is independent of the payroll department.
Question: 10Proper segregation of duties reduces the opportunities for persons to be in positions to both
A. Journalize entries and prepare financial statements.
B. Record cash receipts and cash disbursements.
C. Establish internal control and authorize transactions.
D. Perpetrate and conceal errors or fraud.
ﻛﻝ ﺍﻟﻛﺗﺏ ﻭﺍﻻﺳﺋﻠﻪ ﺍﻟﻠﻲ ﺗﺣﺗﺎﺟﻭﻫﺎ ﺣﺗﻼﻗﻭﻫﺎ ﻋﻠﻰ ﺍﻟﻘﻧﺎﺗﻳﻥ ﺩﻭﻝ
https://t.me/CMA_part1 https://t.me/CMA_part2
, Question: 11Which one of the following situations represents a strength of internal control for purchasing and
accounts payable?
A. Prenumbered receiving reports are issued randomly.
B. Invoices are approved for payment by the purchasing department.
C. Unmatched receiving reports are reviewed on an annual basis.
D. Vendors’ invoices are matched against purchase orders and receiving reports before a liability is
recorded.
Question: 12The frequency of the comparison of recorded accountability with assets (for the purpose of
safeguarding assets) should be determined by
A. The amount of assets independent of the cost of the comparison.
B. The nature and amount of the asset and the cost of making the comparison.
C. The cost of the comparison and whether the susceptibility to loss results from errors or fraud.
D. The auditor in consultation with client management.
Question: 13Which of the following questions would be inappropriate on an internal control questionnaire
concerning purchase transactions?
A. Are an approved purchase requisition and a signed purchase order required for each purchase?
B. Are prenumbered purchase orders and receiving reports used and accounted for?
C. Are all goods received in a centralized receiving department and counted, inspected, and compared with
purchase orders on receipt?
D. Are intact cash receipts deposited daily in the bank?
Question: 14When considering internal control over securities, the auditor is especially concerned about
A. Access to stock certificates by the corporate controller.
B. Access to stock certificates by the corporate treasurer.
C. Preparation of accrual adjustments on bonds by the corporate controller.
D. Approval of temporary stock investment purchases by the corporate treasurer or company president.
ﻛﻝ ﺍﻟﻛﺗﺏ ﻭﺍﻻﺳﺋﻠﻪ ﺍﻟﻠﻲ ﺗﺣﺗﺎﺟﻭﻫﺎ ﺣﺗﻼﻗﻭﻫﺎ ﻋﻠﻰ ﺍﻟﻘﻧﺎﺗﻳﻥ ﺩﻭﻝ
https://t.me/CMA_part1 https://t.me/CMA_part2
14: (151) Internal Controls -- Controls and Security Measures
1: (77) Control Procedures
2: (54) Systems Controls and Information Security
3: (20) Security Measures and Business Continuity Planning
Subunit 1: Control Procedures
Question: 1Internal controls may be preventive, detective, corrective, or directive. Which of the following is
preventive?
A. Requiring two persons to open mail.
B. Reconciling the accounts receivable subsidiary file with the control account.
C. Using batch totals.
D. Preparing bank reconciliations.
Question: 2The procedure requiring preparation of a prelisting of incoming cash receipts, with copies of the
prelist going to the cashier and to accounting, is an example of which type of control?
A. Preventive.
B. Corrective.
C. Detective.
D. Directive.
Question: 3A proper segregation of duties requires that an individual
A. Authorizing a transaction records it.
B. Authorizing a transaction maintain custody of the asset that resulted from the transaction.
C. Maintaining custody of an asset be entitled to access the accounting records for the asset.
D. Recording a transaction not compare the accounting record of the asset with the asset itself.
ﻛﻝ ﺍﻟﻛﺗﺏ ﻭﺍﻻﺳﺋﻠﻪ ﺍﻟﻠﻲ ﺗﺣﺗﺎﺟﻭﻫﺎ ﺣﺗﻼﻗﻭﻫﺎ ﻋﻠﻰ ﺍﻟﻘﻧﺎﺗﻳﻥ ﺩﻭﻝ
https://t.me/CMA_part1 https://t.me/CMA_part2
, Question: 4In a well-designed internal control structure in which the cashier receives remittances from the mail
room, the cashier should not
A. Endorse the checks.
B. Prepare the bank deposit slip.
C. Deposit remittances daily at a local bank.
D. Post the receipts to the accounts receivable subsidiary ledger cards.
Question: 5Accounting controls are concerned with the safeguarding of assets and the reliability of financial
records. Consequently, these controls are designed to provide reasonable assurance that all of the following take
place except
A. Permitting access to assets in accordance with management’s authorization.
B. Executing transactions in accordance with management’s general or specific authorization.
C. Compliance with methods and procedures ensuring operational efficiency and adherence to managerial
policies.
D. Comparing recorded assets with existing assets at periodic intervals and taking appropriate action with
respect to differences.
Question: 6One characteristic of an effective internal control structure is the proper segregation of duties. The
combination of responsibilities that would not be considered a violation of segregation of functional responsibilities
is
A. Signing of paychecks and custody of blank payroll checks.
B. Preparation of paychecks and check distribution.
C. Approval of time cards and preparation of paychecks.
D. Timekeeping and preparation of payroll journal entries.
Question: 7Auditors document their understanding of internal control with questionnaires, flowcharts, and
narrative descriptions. A questionnaire consists of a series of questions concerning controls that auditors consider
necessary to prevent or detect errors and fraud. The most appropriate question designed to contribute to the auditors’
understanding of the completeness of the expenditure (purchases-payables) cycle concerns the
A. Internal verification of quantities, prices, and mathematical accuracy of sales invoices.
B. Use and accountability of prenumbered checks.
ﻛﻝ ﺍﻟﻛﺗﺏ ﻭﺍﻻﺳﺋﻠﻪ ﺍﻟﻠﻲ ﺗﺣﺗﺎﺟﻭﻫﺎ ﺣﺗﻼﻗﻭﻫﺎ ﻋﻠﻰ ﺍﻟﻘﻧﺎﺗﻳﻥ ﺩﻭﻝ
https://t.me/CMA_part1 https://t.me/CMA_part2
, C. Disposition of cash receipts.
D. Qualifications of accounting personnel.
Question: 8Organizational independence is required in the processing of customers’ orders in order to maintain
an internal control structure. Which one of the following situations is not a proper separation of duties in the
processing of orders from customers?
A. Approval by Credit Department of a sales order prepared by the Sales Department.
B. Shipping of goods by the Shipping Department that have been retrieved from stock by the Finished
Goods Storeroom Department.
C. Invoice preparation by the Billing Department and posting to customers’ accounts by the Accounts
Receivable Department.
D. Approval of a sales credit memo because of a product return by the Sales Department with subsequent
posting to the customer’s account by the Accounts Receivable Department.
Question: 9Which one of the following situations represents an internal control weakness in the payroll
department?
A. Payroll department personnel are rotated in their duties.
B. Paychecks are distributed by the employees’ immediate supervisor.
C. Payroll records are reconciled with quarterly tax reports.
D. The timekeeping function is independent of the payroll department.
Question: 10Proper segregation of duties reduces the opportunities for persons to be in positions to both
A. Journalize entries and prepare financial statements.
B. Record cash receipts and cash disbursements.
C. Establish internal control and authorize transactions.
D. Perpetrate and conceal errors or fraud.
ﻛﻝ ﺍﻟﻛﺗﺏ ﻭﺍﻻﺳﺋﻠﻪ ﺍﻟﻠﻲ ﺗﺣﺗﺎﺟﻭﻫﺎ ﺣﺗﻼﻗﻭﻫﺎ ﻋﻠﻰ ﺍﻟﻘﻧﺎﺗﻳﻥ ﺩﻭﻝ
https://t.me/CMA_part1 https://t.me/CMA_part2
, Question: 11Which one of the following situations represents a strength of internal control for purchasing and
accounts payable?
A. Prenumbered receiving reports are issued randomly.
B. Invoices are approved for payment by the purchasing department.
C. Unmatched receiving reports are reviewed on an annual basis.
D. Vendors’ invoices are matched against purchase orders and receiving reports before a liability is
recorded.
Question: 12The frequency of the comparison of recorded accountability with assets (for the purpose of
safeguarding assets) should be determined by
A. The amount of assets independent of the cost of the comparison.
B. The nature and amount of the asset and the cost of making the comparison.
C. The cost of the comparison and whether the susceptibility to loss results from errors or fraud.
D. The auditor in consultation with client management.
Question: 13Which of the following questions would be inappropriate on an internal control questionnaire
concerning purchase transactions?
A. Are an approved purchase requisition and a signed purchase order required for each purchase?
B. Are prenumbered purchase orders and receiving reports used and accounted for?
C. Are all goods received in a centralized receiving department and counted, inspected, and compared with
purchase orders on receipt?
D. Are intact cash receipts deposited daily in the bank?
Question: 14When considering internal control over securities, the auditor is especially concerned about
A. Access to stock certificates by the corporate controller.
B. Access to stock certificates by the corporate treasurer.
C. Preparation of accrual adjustments on bonds by the corporate controller.
D. Approval of temporary stock investment purchases by the corporate treasurer or company president.
ﻛﻝ ﺍﻟﻛﺗﺏ ﻭﺍﻻﺳﺋﻠﻪ ﺍﻟﻠﻲ ﺗﺣﺗﺎﺟﻭﻫﺎ ﺣﺗﻼﻗﻭﻫﺎ ﻋﻠﻰ ﺍﻟﻘﻧﺎﺗﻳﻥ ﺩﻭﻝ
https://t.me/CMA_part1 https://t.me/CMA_part2
