1. When two types of internal control processes work together towards the same objective, they are said to be:

-detective

-complemtary

-higher risk

-inversely related

2. All of these are included as components of the control environment except:

-recruting efforts to hire talented and dedicated employees

-Management and a board of directors who enact effective oversight.

-Ensuring that the organizational hierarchy is built with the proper reporting lines.

-Implementing technology controls to ensure there is documentation of changes.

3. One of the most common limitations of implementing internal controls is:

-cost

-talented staff

-organizational structure

-reliabilty

4. When ______________ and significant deficiencies are found, an auditor should report them to the board of directors, specifically to its audit committee.

-tolerable misstatements

-material weakness

-risk assessments

-test of controls

5. Some internal controls, such as segregation of duties, might not be effective if employees engage in:

-bribes

-test of controls

-collusion

-information processing

6. Which of the following could be considered a significant deficiency?

-Management intends to add a new product line in a very competitive environment.

-Half of the production staff will be temporarily furloughed because of poor sales.

-The accounting / tax manager for your audit client elects to take a tax credit over a tax deduction for the company.

-Top management chooses to not be objective when they are making decisions that affect the financial statements.