Accounting Online Program Auditing and Internal Controls

Question 1

The primary purpose of an external audit is to:

Accepted Answer

Express an opinion on whether financial statements are fairly presented

Answer

Detect all fraud within an organization

Answer

Prepare the financial statements for management

Answer

Ensure the company pays the correct amount of taxes

Question 2

Which organization sets auditing standards for public company auditors in the US?

Accepted Answer

PCAOB

Answer

FASB

Answer

AICPA

Answer

SEC

Question 3

What is the concept of 'audit risk'?

Accepted Answer

The risk that auditors will issue an incorrect opinion on materially misstated statements

Answer

The risk that auditors will charge too high a fee

Answer

The risk that the audit takes longer than planned

Answer

The risk that the client will switch to a different auditor

Question 4

Internal controls are designed primarily to:

Accepted Answer

Safeguard assets, ensure accurate reporting, and promote operational efficiency

Answer

Replace the need for external audits

Answer

Set accounting standards for financial reporting

Answer

Prepare tax returns on time

Question 5

Which Sarbanes-Oxley Act section requires management to assess and report on internal control over financial reporting?

Accepted Answer

Section 404

Answer

Section 201

Answer

Section 301

Answer

Section 802

Question 6

Segregation of duties is an internal control that prevents fraud by:

Accepted Answer

Ensuring no single person controls all phases of a transaction

Answer

Rotating employees between all departments monthly

Answer

Requiring dual signatures on all checks over $500

Answer

Automating all accounting processes