Auditing test bank chapter 10

Auditing and Assurance Services, 15e (Arens)

Chapter 10 Internal Control, Control Risk, and Section 404 Audits

Learning Objective 10-1

1) Which of the following is not one of the three primary objectives of effective internal control?

A) Reliability of financial reporting

B) Efficiency and effectiveness of operations

C) Compliance with laws and regulations

D) Assurance of elimination of business risk

Answer: D

Terms: Internal control objectives

Diff: Easy

Objective: LO 10-1

AACSB: Analytic skills

2) Which of management's assertions with respect to implementing internal controls is the auditor primarily concerned?

A) Efficiency of operations

B) Reliability of financial reporting

C) Effectiveness of operations

D) Compliance with applicable laws and regulations

Answer: B

Terms: Management's assertions

Diff: Easy

Objective: LO 10-1

AACSB: Reflective thinking skills

3) Internal controls:

A) are implemented by and are the responsibility of the auditors.

B) consist of policies and procedures designed to provide reasonable assurance that the company achieves its objectives and goals.

C) guarantee that the company complies with all laws and regulations.

D) only apply to SEC companies.

Answer: B

Terms: Internal control

Diff: Moderate

Objective: LO 10-1

AACSB: Analytic skills

1

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