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Terms in this set (24)
What are the main issues to be addressed in a business code of ethics required by SEC?
Conflicts of interest, Full and Fair Disclosures, Legal Compliance, Internal Reporting of Code Violations, Accountability
List the four broad objectives of the internal control system.
safeguard assets,
ensure the accuracy and reliability of accounting records,
promote organizational efficiency,
comply with management's policies and procedures
ensure the accuracy and reliability of accounting records,
promote organizational efficiency,
comply with management's policies and procedures
Explain the purpose of the PCAOB
The PCAOB is empowered to set auditing, quality control, and ethics standards; to inspect registered accounting firms; to conduct investigations; and to take disciplinary actions.
What are the five internal control components described in the SAS 78 / COSO framework
the control environment, risk assessment, information and communication, monitoring, and control activities
What are management responsibilities under section 302 and 404?
Section 302 requires that corporate management (including the CEO) certify their organization's internal controls on a quarterly and annual basis. Section 404 requires the management of public companies to assess and formally report on the effectiveness of their organization's internal controls.
Identify to indicate whether each procedure is a preventive or detective control.
a.
authorizing a credit sale
Preventive
Detective
b.
preparing a bank reconciliation
Preventive
Detective
c.
locking the warehouse
Preventive
Detective
d.
preparing a trial balance
Preventive
Detective
e.
counting inventory
Preventive
Detective
a.
authorizing a credit sale
Preventive
Detective
b.
preparing a bank reconciliation
Preventive
Detective
c.
locking the warehouse
Preventive
Detective
d.
preparing a trial balance
Preventive
Detective
e.
counting inventory
Preventive
Detective
A. preventive; B. detective; C. preventive; D. detective; E. detective
A clerk reorders 250 items when the inventory falls below 25 items. This is an example of __________________________.
segregation of duties
specific authorization
general authorization
accounting records
access controls
independent verification
supervision
segregation of duties
specific authorization
general authorization
accounting records
access controls
independent verification
supervision
general authorization
The internal audit department recalculates payroll for several employees each pay period. This is an example of __________________________.
segregation of duties
specific authorization
general authorization
accounting records
access controls
independent verification
supervision
segregation of duties
specific authorization
general authorization
accounting records
access controls
independent verification
supervision
independent verification
Locking petty cash in a safe is an example of __________________________.
segregation of duties
specific authorization
general authorization
accounting records
access controls
independent verification
supervision
segregation of duties
specific authorization
general authorization
accounting records
access controls
independent verification
supervision
access controls
Approving a price reduction because goods are damaged is an example of __________________________.
segregation of duties
specific authorization
general authorization
accounting records
access controls
independent verification
supervision
segregation of duties
specific authorization
general authorization
accounting records
access controls
independent verification
supervision
specific authorization
Using cameras to monitor the activities of cashiers is an example of __________________________.
segregation of duties
specific authorization
general authorization
accounting records
access controls
independent verification
supervision
segregation of duties
specific authorization
general authorization
accounting records
access controls
independent verification
supervision
Supervision
Not permitting the computer programmer to enter the computer room is an example of _______________________________.
segregation of duties
specific authorization
general authorization
accounting records
access controls
independent verification
supervision
segregation of duties
specific authorization
general authorization
accounting records
access controls
independent verification
supervision
segregation of duties
Sequentially numbering all sales invoices is an example of __________________________.
segregation of duties
specific authorization
general authorization
accounting records
access controls
independent verification
supervision
segregation of duties
specific authorization
general authorization
accounting records
access controls
independent verification
supervision
accounting records
What are the five conditions necessary for an act to be considered fraudulent?
false representation, material fact, intent, justifiable reliance, and injury or loss
What is the objective of SAS 99?
The objective of SAS 99 is to seamlessly blend the auditor's consideration of fraud into all phases of the audit process.