ACC 406 Exam 3 with verified detailed solutions ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
7. Which of the following COSO internal control framework components encompasses
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establishing structures, reporting lines, authorities, and responsibilities? - correct ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
answer✔✔Control environment. ||\\//||
7. If the auditors do not perform tests of controls for certain assertions: - correct
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answer✔✔They must assess control risk at the maximum level for those assertions. ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
7. Which of the following would be least likely to be regarded as a test of a control? - correct
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answer✔✔Review of a confirmation of accounts payable.
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7. Of the following statements about internal control, which one is not valid? - correct
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answer✔✔Control activities alone can be effective at minimizing the risk of material ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
misstatements.
7. The scope of substantive procedures as compared to the scope of tests of controls
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generally vary: - correct answer✔✔Inversely. ||\\//|| ||\\//|| ||\\//|| ||\\//||
7. After obtaining an understanding of internal control and arriving at a preliminary
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assessed level of control risk, an auditor decided to perform additional tests of controls. The
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auditor most likely decided that: - correct answer✔✔It would be efficient to perform tests of
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controls that would result in a reduction in planned substantive procedures.
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7. The effectiveness of controls is not generally tested by: - correct answer✔✔Performance
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of analytical procedures.
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, 7. Which of the following is not a component of the control environment? - correct
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answer✔✔Monitoring performance. ||\\//||
7. Which of the following comes closest to outlining the auditors' responsibility for
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considering internal control in all financial statement audits? - correct answer✔✔The ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
auditor must obtain an understanding of each of the five internal control components
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sufficient to assess the risks of material misstatement for the audit. ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
7. Tests of controls are most likely to be performed when: - correct answer✔✔The auditor
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plans to rely on the controls.||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
7. Which is most likely when the assessed level of control risk increases? - correct
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answer✔✔Change from performing substantive procedures at an interim date to ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
performing them at year end. ||\\//|| ||\\//|| ||\\//|| ||\\//||
7. A client's internal control appears strong, but the CPA has elected not to perform any
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tests of controls. The planned assessed level of control risk is at what level? - correct
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answer✔✔Maximum.
7. Which of the following must the auditor communicate to the audit committee? - correct
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answer✔✔Significant deficiencies and material weaknesses. ||\\//|| ||\\//|| ||\\//|| ||\\//||
7. When tests of controls reveal that controls are operating as anticipated, it is most likely
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that the assessed level of control risk will: - correct answer✔✔Equal the preliminary
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assessed level of control risk. ||\\//|| ||\\//|| ||\\//|| ||\\//||
7. Which of the following would least likely be included in an auditor's tests of controls? -
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correct answer✔✔Analytical procedures. ||\\//|| ||\\//||
7. Which of the following COSO internal control framework components encompasses
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establishing structures, reporting lines, authorities, and responsibilities? - correct ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
answer✔✔Control environment. ||\\//||
7. If the auditors do not perform tests of controls for certain assertions: - correct
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answer✔✔They must assess control risk at the maximum level for those assertions. ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
7. Which of the following would be least likely to be regarded as a test of a control? - correct
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answer✔✔Review of a confirmation of accounts payable.
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7. Of the following statements about internal control, which one is not valid? - correct
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answer✔✔Control activities alone can be effective at minimizing the risk of material ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
misstatements.
7. The scope of substantive procedures as compared to the scope of tests of controls
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generally vary: - correct answer✔✔Inversely. ||\\//|| ||\\//|| ||\\//|| ||\\//||
7. After obtaining an understanding of internal control and arriving at a preliminary
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assessed level of control risk, an auditor decided to perform additional tests of controls. The
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auditor most likely decided that: - correct answer✔✔It would be efficient to perform tests of
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controls that would result in a reduction in planned substantive procedures.
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7. The effectiveness of controls is not generally tested by: - correct answer✔✔Performance
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of analytical procedures.
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, 7. Which of the following is not a component of the control environment? - correct
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answer✔✔Monitoring performance. ||\\//||
7. Which of the following comes closest to outlining the auditors' responsibility for
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considering internal control in all financial statement audits? - correct answer✔✔The ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
auditor must obtain an understanding of each of the five internal control components
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sufficient to assess the risks of material misstatement for the audit. ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
7. Tests of controls are most likely to be performed when: - correct answer✔✔The auditor
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plans to rely on the controls.||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
7. Which is most likely when the assessed level of control risk increases? - correct
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answer✔✔Change from performing substantive procedures at an interim date to ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//|| ||\\//||
performing them at year end. ||\\//|| ||\\//|| ||\\//|| ||\\//||
7. A client's internal control appears strong, but the CPA has elected not to perform any
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tests of controls. The planned assessed level of control risk is at what level? - correct
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answer✔✔Maximum.
7. Which of the following must the auditor communicate to the audit committee? - correct
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answer✔✔Significant deficiencies and material weaknesses. ||\\//|| ||\\//|| ||\\//|| ||\\//||
7. When tests of controls reveal that controls are operating as anticipated, it is most likely
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that the assessed level of control risk will: - correct answer✔✔Equal the preliminary
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assessed level of control risk. ||\\//|| ||\\//|| ||\\//|| ||\\//||
7. Which of the following would least likely be included in an auditor's tests of controls? -
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correct answer✔✔Analytical procedures. ||\\//|| ||\\//||
