ASSIGNMENT
The following are general questions about internal control. Choose the best response.
a. Which of the following would not be considered an inherent limitation of the potential effectiveness of an entity’s internal control structure?
(1) Mistakes in judgment
(2) Management override
(3) Incompatible duties
(4) Collusion among employees
b. Actions, policies, and procedures that reflect the overall attitude of management, directors, and owners of the entity about internal control relate to which of the following internal control components?
(1) Control environment
(2) Information and communication
(3) Risk assessment
(4) Monitoring
c. Vendor account reconciliations are performed by three clerks in the accounts payable department on Friday of each week. The accounts payable supervisor reviews the completed reconciliations the following Monday to ensure they have been completed. The work performed by the supervisor is an example of which COSO component?
(1) Control activities
(2) Information and communication
(3) Risk assessment
(4) Monitoring
The following questions concern the characteristics of IT systems and their impact on internal controls. Choose the best response.
a. Which of the following is an advantage of a computer-based system for transaction processing over a manual system? A computer-based system
(1) does not require as stringent a set of internal controls.
(2) will produce a more accurate set of financial statements.
(3) eliminates the need to reconcile control accounts and subsidiary ledgers.
(4) will be more efficient in generating financial statements.
b. Which of the following is generally not considered a category of IT general controls?
(1) Controls that determine whether a vendor number matches the preapproved vendors in the vendor master file
(2) Controls that restrict systemwide access to programs and data
(3) Controls that oversee the acquisition of application software
(4) Controls that oversee the day-to-day operation of IT applications
c. Which of the following is an example of an application control?
(1) The client uses access security software to limit access to each of the accounting
applications.
(2) Employees are assigned a user ID and password that must be changed every quar-
ter.
(3) The sales system automatically computes the total sale amount and posts the to-
tal to the sales journal master file.
(4) Systems programmers are restricted from doing applications programming
functions.
