dicate which statements are true and which are false. Bonding key employees helps reduce risk of theft. Hiring auditors to review internal controls increases risk of theft. Establishing responsibilities helps determine who is at fault for errors or fraud. Separating the responsibility for a transaction between two or more individuals or departm stem of internal control.

dicate which statements are true and which are false. Bonding key employees helps reduce risk of theft. Hiring auditors to review internal controls increases risk of theft. Establishing responsibilities helps determine who is at fault for errors or fraud. Separating the responsibility for a transaction between two or more individuals or departm stem of internal control.

Auditing: A Risk Based-Approach (MindTap Course List)

11th Edition

ISBN:9781337619455

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter3: Internal Control Over Financial Reporting: Responsibilities Of Management And The External Auditor

Section: Chapter Questions

Problem 16CYBK

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d. Internal auditing is also known as operational auditing. e. BIR auditing is also known as compliance auditing. f. The internal auditor is directly concerned with the detection and prevention of fraud.
Internal controls do each of the following except: A. Evaluate performance of employees B. Guarantee the accuracy if account records C. Protect assets D. Increase the likelihood that any errors will be caught
Which one of the following is not an objective of a system of internal controls? Select one: 1. Overstate liabilities in order to be conservative 2. Enhance the accuracy and reliability of accounting records 3. Safeguard company assets 4. Reduce the risks of errors
Which of the following is NOT one of the purposes of internal control? a. to guarantee the success of the business b. to safeguard the entity’s assets and resources c. to deter errors, fraud, and theft d. to ensure the accuracy and completeness of the accounting data
Indicate which statements are true and which are false. The primary objective of internal control procedures is to safeguard the business against theft from government agencies.
Management can expect various benefits to follow from implementing a system of strong internal control. Which of the following benefits is least likely to occur?a. reduction of cost of an external auditb. prevention of employee collusion to commit fraudc. availability of reliable data for decision-making purposesd. some assurance of compliance with the Foreign Corrupt Practices Act of 1977e. some assurance that important documents and records are protected
A business wishes to establish sound internal controls. What rules and processes can you recommend to help limit human fraud and error?
Prevention and detection of fraud is the primary responsibility of: a. The Management b. The Government c. The External Auditor d. The Internal Auditor
To guard against fraud and waste, businesses use internal controls. correct or incorrect
Which of the following would assist an entity in cat and prevent fraud? a. Accounting reconciliations b. Segregation of duties c. All the options d. Performance reviews
Collusion is an intentional act of two or more employees to accomplish theft of company assets. Which control activity is designed to make fraud less likely because it would require collusion among employees? A. Adequate documents and records B. Clearly defined authority and responsibility C. Safeguards over assets and records D. Segregation of duties
Which of the following is an inherent limitation of any client's internal control? Multiple Choice • Procedures designed to assure the execution and recording of transactions in accordance with proper authorizations are effective against frauds perpetrated by management. • Procedures whose effectiveness depends on separation of duties can be circumvented by collusion. • The competence and integrity of client personnel provide an environment conducive to control and provides assurance that effective control will be achieved. • The benefits expected to be derived from effective internal controls usually do not exceed the costs of effective internal controls.