Question: Multiple Choice Questions Select the best answer for each of

Multiple Choice Questions
Select the best answer for each of the following questions. Explain the reasons for your selection:
a. In an integrated audit, which of the following must the auditors communicate to the audit committee?

b. In an integrated audit, which of the following lead(s) to an adverse opinion on internal control?

c. In an integrated audit, which of the following must be communicated by management to the audit committee?

d. Which of the following is most likely to be considered a material weakness in internal control?
(1) Ineffective oversight of financial reporting by the audit committee.
(2) Restatement of previously issued financial statements due to a change in accounting principles.
(3) Inadequate controls over nonroutine transactions.
(4) Weaknesses in risk assessment.

e. Which of the following is defined as a weakness in internal control that allows a reason- able possibility of a misstatement that is material?
(1) Control deficiency.
(2) Material weakness.
(3) Reportable condition.
(4) Significant deficiency.

f. The auditors identified a material weakness in internal control in August. The client was informed and the client corrected the material weakness prior to year-end (December 31); the auditors concluded that management eliminated the material weakness prior to year-end. The appropriate audit report on internal control is:
(1) Adverse.
(2) Qualified.
(3) Unqualified.
(4) Unqualified with explanatory language relating to the material weakness.

g. Which of the following need not be included in management’s report on internal control under Section 404(a) of the Sarbanes-Oxley Act of 2002?
(1) A statement that the company’s auditors have issued an attestation report on management’s assertion.
(2) An identification of the framework used for evaluating internal control.
(3) Management’s assessment of the effectiveness of internal control.
(4) Management’s acknowledgment of its responsibility to establish and maintain internal control that detects all significant deficiencies.

h. Management’s documentation of internal control ordinarily should include information on:

i. A material weakness is a control deficiency (or combination of control deficiencies) that results in a reasonable possibility that a misstatement of at least what amount will not be prevented or detected?
(1) Any amount greater than zero.
(2) A greater amount than zero, but an amount that is at least inconsequential.
(3) A greater amount than inconsequential.
(4) A material amount.

j. A procedure that involves tracing a transaction from origination through the company’s information systems until it is reflected in the company’s financial report is referred to as a(n):
(1) Analytical analysis.
(2) Substantive test.
(3) Test of a control.
(4) Walk-through.

k. Which of the following is not a typical question asked during a walk-through?
(1) Have you ever been asked to override the process or controls?
(2) What do you do when you find an error?
(3) What is the largest fraudulent transaction you ever processed?
(4) What kind of errors have you found?

l. An audit of internal control over financial reporting ordinarily assesses internal control:
(1) As of the last day of the fiscal period.
(2) As of the last day of the auditor’s fieldwork.
(3) For the entire fiscal period.
(4) For the entire period plus the period of the auditor’sfieldwork.

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