Principles Of Auditing & Other Assurance Services
21st Edition
ISBN: 9781259916984
Author: WHITTINGTON, Ray, Pany, Kurt
Publisher: Mcgraw-hill Education,
expand_more
expand_more
format_list_bulleted
Videos
Textbook Question
Chapter 7, Problem 24QRA
Management is responsible for designing and maintaining its organization’s internal control. In designing internal control, management must consider controls related to each of the five major internal control components: the control environment, risk assessment, the
Required:
- a. Management is considering controls for the following three control environment factors. For each, describe how the factor contributes to effective internal control.
- (1) Integrity and ethical values.
- (2) Commitment to competence.
- (3) Board independence and effective oversight.
- b. Explain how risk assessment contributes to effective internal control, and identify four factors that result in increased financial reporting risk.
- c. Identify the five major objectives of an accounting information system.
- d. Describe the purpose of the following two types of control activities:
- (1) Performance reviews.
- (2) Transaction processing.
- e. Explain the two types of monitoring and provide an example of each.
Expert Solution & Answer
Trending nowThis is a popular solution!
Students have asked these similar questions
Following is a list of internal controls. Select the COSO component that best matches each internal control.
Internal control
a. Implementation of policies to reduce risk of internal control failure.
b. Reporting of internal control effectiveness to investors.
c. Evaluation of internal control effectiveness by external auditors.
d. Identification and management of risks.
COSO
Control activities
Information & communication
Monitoring
Risk assessment
Control environment
Assessm
In which element of Internal Control
are personnel policies included:
Control Procedures
Control Environment
O Risk Assessmenet
Information and Communication
O Monitoring
Match each of the following components of internal control with its description.
Components of Internal Control
Descriptions
1. Control environment
2. Risk assessment
3. Control activities
4. Information and communication
5. Monitoring
a. Procedures for maintaining separation ofduties.b. Routine activities that are meant tocontinually observe internal controlactivities.c. Transfer of data from lower managersto top executives for accurate financialreporting.d. Formal policies to evaluate internal andexternal threats to achieving companyobjectives.e. Overall attitude of the company withrespect to internal controls.
Chapter 7 Solutions
Principles Of Auditing & Other Assurance Services
Ch. 7 - Prob. 1RQCh. 7 - Prob. 2RQCh. 7 - Prob. 3RQCh. 7 - Prob. 4RQCh. 7 - Prob. 5RQCh. 7 - Prob. 6RQCh. 7 - Prob. 7RQCh. 7 - Identify the four types of control activities and...Ch. 7 - One basic concept of internal control is that no...Ch. 7 - Prob. 10RQ
Ch. 7 - Prob. 11RQCh. 7 - Prob. 12RQCh. 7 - Prob. 13RQCh. 7 - Prob. 14RQCh. 7 - Prob. 15RQCh. 7 - Prob. 16RQCh. 7 - Prob. 17RQCh. 7 - Prob. 18RQCh. 7 - Prob. 19RQCh. 7 - Prob. 20RQCh. 7 - Prob. 21RQCh. 7 - Prob. 22RQCh. 7 - Prob. 23RQCh. 7 - Management is responsible for designing and...Ch. 7 - Prob. 25QRACh. 7 - Prob. 26QRACh. 7 - Prob. 27QRACh. 7 - Prob. 28QRACh. 7 - Prob. 29QRACh. 7 - Prob. 30QRACh. 7 - Prob. 31QRACh. 7 - During your first audit of a medium-size...Ch. 7 - Prob. 33QRACh. 7 - Prob. 34QRACh. 7 - Which of the following would be least likely to be...Ch. 7 - Prob. 35BOQCh. 7 - Prob. 35COQCh. 7 - Prob. 35DOQCh. 7 - Prob. 35EOQCh. 7 - Prob. 35FOQCh. 7 - Prob. 35GOQCh. 7 - Prob. 35HOQCh. 7 - Which of the following is not an advantage of...Ch. 7 - Prob. 35JOQCh. 7 - Prob. 35KOQCh. 7 - Prob. 35LOQCh. 7 - Prob. 36OQCh. 7 - Listed below are controls that have been developed...Ch. 7 - Prob. 38OQCh. 7 - For each term in the first column, find the...Ch. 7 - Prob. 40AOQCh. 7 - Prob. 40BOQCh. 7 - Prob. 40COQCh. 7 - Prob. 40DOQCh. 7 - Prob. 40EOQCh. 7 - Prob. 41PCh. 7 - Prob. 42PCh. 7 - Prob. 43PCh. 7 - Prob. 44PCh. 7 - Prob. 45ITC
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- What are the components of internal control per COSO’s Internal Control—Integrated Framework? a. Organizational structure, management philosophy, planning, risk assessment, and control activities. b. Control environment, risk assessment, control activities, information and communication, and monitoring. c. Risk assessment, control structure, backup facilities, responsibility accounting, and natural laws. d. Legal environment of the firm, management philosophy, organizational structure, control activities, and control assessment.arrow_forwardRefer to Exhibit 3.10 and Exhibit 3.11. Describe management’s process for evaluating internal control over financial reporting. For the control environment principles, identify evidence that management might obtain to assess the operating effectiveness of the control environment.arrow_forwardMatch the following elements of internal control: Question 4 options: information and communication control environment risk assessment monitoring control procedures 1. provides reasonable assurance that business goals will be achieved 2. used by management for guiding operations and ensuring compliance with requirements 3. overall attitude of management and employees 4. used to locate weaknesses and improve controls 5. identify, analyze and assess likeliness of vulnerabilitiesarrow_forward
- 1. What are objectives? What three categories of objectives are set forth in the COSO framework? 2. What does the control environment comprise? 3. What are control activities? What types of control activities are present in a well-designed system of internal controls? 4. When are monitoring activities most effective? Who performs monitoring activities? What distinguishes separate evaluations from ongoing monitoring activities? 5. How does internal auditors' perspective of internal control differ from management's perspective? 6. How does COSO define risk? How does ISO define risk? 7. What are the five COSO ERM components? 8. How does COSO define risk appetite? 9. What are some ERM assurance activities the internal audit function may perform? What are some ERM consulting activities the internal audit function may perform if appropriate safeguards are implemented? What ERM activities should the internal audit function not perform? 10. What are COSO's five categories of risk…arrow_forwardWhich of the following is an element of the control environment? Oa. Risk assessment plans Ob. Managements' operating styles Oc. Control proceares Od. Information and communication activitiesarrow_forwardInternal control system is effective in managing risk, who is responsible to ensure the effectiveness: Chief Executive Officer Auditor Management Audit Committeearrow_forward
- 1. How does internal control impart on the achievement of organization’s goals? 2. Why risk management process is essential in addressing risks that the organization is facing? 3. Differentiate qualitative and quantitative assessment of risks.arrow_forward1. Looking at the COSO framework for Enterprise Risk Management, you will notice that this is present all throughout the various functions and levels in an organization. This is to ensure that policies and procedures are followed in making risk responses and implementing company's directives. A. Control Activities B. Risk Assessment C. Monitoring Activities D. Risk Culturearrow_forwardWhich of the following are true regarding internal auditors and the adequacy of an organization's risk management process 1. Internal auditors must understand the risk assessment process and the tools used to make the assessment II. Internal auditors should determine the level of risks acceptable to the organization III. Internal auditors need to be satisfied that the key objectives of risk management processes are being met IV. Internal auditors should evaluate management's risk processes the same way they analyze risk when planning an engagement O I II, III and IV O None of the choices O , Il and III only O l and Il onlyarrow_forward
- Audit procedures designed to evaluate the operating effectiveness of controls to prevent, detect, or correct material misstatements are known as organizational structure. O control testing. O commitment to competence. O management's philosophy and operating style.arrow_forwardList at least five control measures per control activity principle (Establishment of Responsibility, Segregation of Duties, Documentation Procedures, Physical Controls, Independent Internal Verification, and Human Resource Controls) that an organization may implement to establish internal control procedures.arrow_forwardIndicate the COSO component that matches with each of the following internal control activities. Internal control activities a. Reporting of control effectiveness. b. Analyses of fraud risk factors. c. Implementation of policies to reduce risk of internal control failure. d. Executives' strong ethics. COSO componentsarrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Auditing: A Risk Based-Approach (MindTap Course L...AccountingISBN:9781337619455Author:Karla M Johnstone, Audrey A. Gramling, Larry E. RittenbergPublisher:Cengage Learning
Business/Professional Ethics Directors/Executives...AccountingISBN:9781337485913Author:BROOKSPublisher:Cengage
Auditing: A Risk Based-Approach to Conducting a Q...AccountingISBN:9781305080577Author:Karla M Johnstone, Audrey A. Gramling, Larry E. RittenbergPublisher:South-Western College Pub
Auditing: A Risk Based-Approach (MindTap Course L...
Accounting
ISBN:9781337619455
Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:Cengage Learning
Business/Professional Ethics Directors/Executives...
Accounting
ISBN:9781337485913
Author:BROOKS
Publisher:Cengage
Auditing: A Risk Based-Approach to Conducting a Q...
Accounting
ISBN:9781305080577
Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:South-Western College Pub
Internal Control Components; Author: Accounting Instruction, Help, & How To;https://www.youtube.com/watch?v=D8SSaqpE6L8;License: Standard Youtube License