All of the following are possible responses to a pervasive weakness in internal control except: Multiple Choice Assign more experienced personnel to the engagement. Increasing the level of supervision on the engagement. Increase the size of a sample for certain tests in the engagement. Adding an element of unpredictability to the procedures performed.

All of the following are possible responses to a pervasive weakness in internal control except: Multiple Choice Assign more experienced personnel to the engagement. Increasing the level of supervision on the engagement. Increase the size of a sample for certain tests in the engagement. Adding an element of unpredictability to the procedures performed.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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7) In an environment that is highly automated an auditor determines that it is not possible to reduce detection risk solely by using substantive test of transactions. Under these circumstances the auditor most likely would: Perform test of controls to support a lower level of assessed risk. Increase sample size to reduce sampling risk and detection risk. Adjust the materiality level and consider the effect on inherent risk Apply analytical procedures and consider the effect on control risk
Strong internal control will increase the reliability of certain types of evidence and thereby increase the overall quantity of substantive procedures performed by the auditors. True or False True False
As the acceptable level of detection risk increases, an auditor may: Oa. Lower the assessed level of inherent risk. O b. Eliminate the assessed level of control risk from consideration as a planning factor. O c. Change the planned timing of substantive tests from year-end to interim. Od. Increase the risk of material misstatement.
In assessing the possibility of invalid data in a human resources computer system, such as incorrect job classifications, ages exceeding retirement age, or erroneous ethnic classifications, the auditor should employ the following approach to determine the potential extent of the problem:Select one: a. Submit test data to test the effectiveness of edit controls over the input of data. b. Use generalized audit software to select a sample of employees. Use the sample to determine the validity of data items and project the result to the population as a whole. c. Review and test access controls to ensure that access is limited to authorized individuals. d. Use generalized audit software to develop a detailed report of all data outside specified parameters.
Why do we consider risk assessment the foundation of the internal audit function? To safeguard independence, many internal audit departments continue to perform risk assessments in a silo, without collaborating with and leveraging the work of ERM. Do you agree with this approach?
The auditors' working papers will generally be least likely to include documentation showing how the: Multiple Choice engagement had been planned. client's schedules were prepared. client's internal control structure had been considered. unusual matters were resolved.
Distinguish between errors and irregularities. Which do you think concern the auditors the most? 3. Distinguish between errors and irregularities. Which do you think concern the auditors the most? 4. Compare and contrast the following disaster recovery options: empty shell, recovery operations center, and internally provided backup. Rank them from most risky to least risky, as well as most costly to least costly . 5. Auditors examine the physical environment of the computer center as part of their audit. Many characteristics of computer centers are of interest to auditors. What are they? Discuss. 6. What is a disaster recovery plan? What are the key features? 7. What are some typical problems with passwords? 8. What are biometric devices? 9. In a distributed data processing system, a database can be centralized or distributed. What are the options? Explain. 10. Explain the role of accountants in the conceptual design stage. 11. Explain why the Systems Development Life Cycle is of…
If the sample evidence does not support the planned level of control risk, the audit team coulda. Increase the assessed level of control risk.b. Perform additional substantive procedures, reducing the necessary level of detection risk.c. Expand the sample to achieve an observed ULRD less than the tolerable rate of deviation.d. All of the above are acceptable.
When is more frequent monitoring of internal controls not required?* When employees are poorly trained. When the control activity and risk being managed are important. When a department is making changes to an application being used in that department. When internal controls have recently been changed to reduce the frequency of errors.
In a non public audit (AICPA), auditors might chose to not test controls if Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a Design of control is weak/deficient, Controls Risk is High, or High cost of testing I/C b Design of control is strong/effective, Control Risk is low or low cost of testing
Which of the following is NOT an example of a significant deficiency in internal control? O evidence of an effective response to identified significant risks O misstatements not prevented or detected by internal controls O evidence of an ineffective entity risk assessment process O identification of management fraud
The difference between assessing control risk for IT control activities versus assessing control risk for manual control activities is best described as follows: Multiple Choice О in a manual environment it is important for the auditor to gain an understanding of the internal control activity before assessing control risk. О in an IT environment, it is not important to gain an understanding of the internal control activity before assessing control risk. О In an IT environment, it is likely that control risk will be assessed as low on largely all audit engagements. О the assessment process that needs to be undertaken for IT controls is essentially the same as would be taken for manual controls.