Auditing and Assurance Services (16th Edition)
16th Edition
ISBN: 9780134065823
Author: Alvin A. Arens, Randal J. Elder, Mark S. Beasley, Chris E. Hogan
Publisher: PEARSON
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Question
Chapter 1, Problem 13.2MCQ
To determine
Identify the statement that correctly defines the term operation audit.
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Which of the following best describes the operational audit?
Select one:
a. It requires the constant review by internal auditors of the administrative controls as they relate to the operations of the company.
b. It concentrates on seeking aspects of operations in which waste could be reduced by the introduction of controls.
c. It attempts and is designed to verify the fair presentation of a company’s results of operations.
d. It concentrates on implementing financial and accounting control in a newly organized company.
Which of the following best describes the operational audit?(1) It requires constant review by internal auditors of the administrative controls asthey relate to the operations of the company.(2) It concentrates on implementing financial and accounting controls in a newlyorganized company.(3) It attempts and is designed to verify the fair presentation of a company’s resultsof operations.(4) It concentrates on seeking aspects of operations in which waste would be reducedby the introduction of controls
Internal control system comprises the company's policies, practices and procedures which are employed in order to: safeguard its assets, ensure the accuracy and reliability of accounting records and information, promote efficiency in its operations, measure management's compliance with prescribed policies and procedures and ensure the issuance of an unqualified opinion on its financial statements by its external auditors. true or false?
Chapter 1 Solutions
Auditing and Assurance Services (16th Edition)
Ch. 1 - What are the information and established criteria...Ch. 1 - Prob. 2RQCh. 1 - Discuss changes in accounting and business...Ch. 1 - Prob. 4RQCh. 1 - Identify the three main ways information risk can...Ch. 1 - Prob. 6RQCh. 1 - Prob. 7RQCh. 1 - Prob. 8RQCh. 1 - Prob. 9RQCh. 1 - Prob. 10RQ
Ch. 1 - Prob. 11RQCh. 1 - Prob. 12.1MCQCh. 1 - Prob. 12.2MCQCh. 1 - Prob. 12.3MCQCh. 1 - Prob. 13.1MCQCh. 1 - Prob. 13.2MCQCh. 1 - Prob. 13.3MCQCh. 1 - Prob. 14.1MCQCh. 1 - Prob. 14.2MCQCh. 1 - Prob. 14.3MCQCh. 1 - Prob. 15DQPCh. 1 - Busch Corporation has an existing loan in the...Ch. 1 - Prob. 17DQPCh. 1 - James Burrow is the loan officer for the National...Ch. 1 - Prob. 19DQPCh. 1 - Prob. 20DQPCh. 1 - Prob. 21DQPCh. 1 - Prob. 22DQPCh. 1 - As discussed in the chapter opening vignette and...Ch. 1 - Prob. 24DQP
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Similar questions
- The external auditor of a company has certain requirements due to Sarbanes-Oxley. Which of the following best describes these requirements? A. The auditor is required to only report weaknesses in the internal control design of the company he or she is auditing. B. The auditor must issue an internal control report on the evaluation of internal controls overseen by the Public Company Accounting Oversight Board C. The auditor in charge can serve for a period of only two years. D. The Public Company Accounting Oversight Board reviews reports submitted by the auditors when no evaluations have been performed.arrow_forwardWhich of the following control objectives in the General Ledger activities under the Record-to-Report process is least likely to have more extensive audit procedures for a business in an industry with fewer regulations? A.To ensure that the general ledger and management accounts are accurate, reliable, and appropriately reflect the structure and operations of the organization, B.To ensure that the accounting records are maintained in accordance with the prevailing laws, regulations, and professional good practice. C.To ensure that the accounting data is capable of meaningful and accurate analysis to support management decisions and actions. D.To ensure that the accounting information can be used to generate all the required statutory published accounting statements.arrow_forwardWhich of the following is NOT a requirement in management’s report on the effectiveness of internal controls over financial reporting?a. A statement of management’s responsibility for establishing and maintaining adequate internal control user satisfaction. b. A statement that the organization’s internal auditors have issued an attestation report on management’s assessment of the company’s internal controls. c. A statement identifying the framework management uses to conduct its assessment of internal controls. d. An explicit written conclusion as to the effectiveness of internal control over financial reporting.arrow_forward
- Which of the following control objectives in the General Ledger activities under the Record-to-Report process is least likely to have more extensive audit procedures for a business in an industry with fewer regulations? a. To ensure that the general ledger and management accounts are accurate, reliable, and appropriately reflect the structure and operations of the organization. b. To ensure that the accounting information can be used to generate all the required statutory published accounting statements. c. To ensure that the accounting data is capable of meaningful and accurate analysis to support management decisions and actions. d. To ensure that the accounting records are maintained in accordance with the prevailing laws, regulations, and professional good practice. NEED ASAParrow_forwardWhich of the following is NOT one of the roles of an audit committee? Which of the following is NOT one of the roles of an audit committee? reviewing the work of the internal audit ensuring that appropriate resources are used in company operations reviewing systems of internal control. launching special investigations of employees, company practices, or proceduresarrow_forwardPrepare a broad audit plan:1. What material types of transactions and transaction cycles are involved?2. What are the high-risk areas?3. What are the low-risk areas?4. If management faced tremendous pressure regarding the entity’s financial performance, what opportunities might exist for them to engage in fraudulent financial reporting?5. To what extent do you believe it will be appropriate to reduce assessed control risk?6. How will audit effort be allocated among geographical areas?7. What form of auditors’ report do you expect will be issued; what does it mean?8. Indicate as an appendix to the report how the project team was organized and how it functioned on the project and submit appendix with Team Project.arrow_forward
- Which of the following activities should the internal audit function NOT be involved in?a. Monitoring of management's performanceb. Reviewing adequacy of management information for decision-making purposesc. Taking responsibility for the implementation of a new sales ledger systemd. Assessing compliance with regulation Internal auditors may not perform:a. Audits of financial statements resulting in reports intended for management’s use only.b. Integrated audits leading to an audit opinion issued in accordance with PCAOB standards.c. Forensic audits.d. All of the above. An “integrated audit”, as required by Sarbanes-Oxley Act for U.S. public companies,includes an audit ofa. The company’s internal controlsb. The company’s financial statementsc. The company’s compliance with its rules and policiesd. Both A and B The auditor’s opinions on the effectiveness of internal control over financial reporting (ICFR) in anintegrated audit in accordance with PCAOB AS include the following types…arrow_forwardPlease respond promptly: When auditing a private company, the auditor should obtain an understanding of internal control sufficient to___________. Select one: a. Provide a method for safeguarding assets, checking the accuracy and reliability of accounting data, promoting operational efficiency, and encouraging adherence to prescribed managerial policies. b. Provide reasonable protection against client fraud and defalcations by client employees. c. Assess control risk. d. Provide a basis for suggestions to the client for improving the accounting system.arrow_forwardWhen an auditor needs to obtain an understanding of the overall internal control of a company, the auditor first needs to consider the elements of the control environment. To assist the auditor in assessing the level of control risk, the following tests of controls were designed to allow the auditor to determine if the company’s related controls were operating effectively in the revenue cycle. Determine which of the four management assertion(s) apply to each individual sales (revenue) control being discussed. Hint: many have more than one assertion.arrow_forward
- Explain how a newly established internal audit department at an organization could support the directors in preventing and detecting instances of fraud and error.arrow_forwardAn organization’s internal audit department is usually considered an effective control mechanism for evaluating the organization’s internal control structure. The Birch Company’s internal auditing function reports directly to the controller. Comment on the effectiveness of this organizational structure.arrow_forwardInternal control should be designed to provide reasonable assurance that a. Management’s planning, organizing, and directing processes are properly evaluated b. Management’s plans have not been circumvented by employee collusion c. Material errors or fraud will be prevented, or detected and corrected within a timely period by employees in the course of performing their assigned duties d. The internal auditing department’s guidance and oversight of management’s performance is accomplished economically and efficientlyarrow_forward
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