AUD 3 Internal Control 11 - SOX & Basic Concepts Flashcards

Question

Sarbanes - Oxley Act (SOX) Some issues include: • Section 302 is entitled “Corporate Responsibility for Financial Reports” and requires that the principal executive officer and the principal financial officer, or their equivalents, certify as to certain items on each annual or quarterly report: o The signing officer has reviewed the report o Based on the signer’s knowledge, the report does not contain a material untrue statement or omit a material fact o Based on the signer’s knowledge, the financial statements and other information are f___ly presented

Answer 1

Sarbanes - Oxley Act (SOX) Some issues include: • Section 302 is entitled “Corporate Responsibility for Financial Reports” and requires that the principal executive officer and the principal financial officer, or their equivalents, certify as to certain items on each annual or quarterly report: o The signing officer has reviewed the report o Based on the signer’s knowledge, the report does not contain a material untrue statement or omit a material fact o Based on the signer’s knowledge, the financial statements and other information are fairly presented

Answer 2

Sarbanes - Oxley Act (SOX) Some issues include: • Section 302 is entitled “Corporate Responsibility for Financial Reports” and requires that the principal executive officer and the principal financial officer, or their equivalents, certify as to certain items on each annual or quarterly report: o The signing officer has reviewed the report o Based on the signer’s knowledge, the report does not contain a material untrue statement or omit a material fact o Based on the signer’s knowledge, the financial statements and other information are fairly presented

Answer 3

Sarbanes - Oxley Act (SOX) Some issues include: • Section 302 is entitled “Corporate Responsibility for Financial Reports” and requires that the principal executive officer and the principal financial officer, or their equivalents, certify as to certain items on each annual or quarterly report: o The signing officer has reviewed the report o Based on the signer’s knowledge, the report does not contain a material untrue statement or omit a material fact o Based on the signer’s knowledge, the financial statements and other information are fairly presented

Answer 4

Sarbanes - Oxley Act (SOX) Some issues include: • Section 302 is entitled “Corporate Responsibility for Financial Reports” and requires that the principal executive officer and the principal financial officer, or their equivalents, certify as to certain items on each annual or quarterly report: o The signing officer has reviewed the report o Based on the signer’s knowledge, the report does not contain a material untrue statement or omit a material fact o Based on the signer’s knowledge, the financial statements and other information are fairly presented

Answer 5

Sarbanes - Oxley Act (SOX) Some issues include: • In addition, the signing officers certify that: o They are responsible for establishing and maintaining internal controls

Answer 6

Sarbanes - Oxley Act (SOX) Some issues include: • In addition, the signing officers certify that: o They are responsible for establishing and maintaining internal controls

Answer 7

Sarbanes - Oxley Act (SOX) Some issues include: • In addition, the signing officers certify that: o They are responsible for establishing and maintaining internal controls

Answer 8

Sarbanes - Oxley Act (SOX) Some issues include: • In addition, the signing officers certify that: o They are responsible for establishing and maintaining internal controls o They have designed those controls to ensure the receipt of all relevant information during those periods in which periodic reports are being prepared

Answer 9

Sarbanes - Oxley Act (SOX) Some issues include: • In addition, the signing officers certify that: o They are responsible for establishing and maintaining internal controls o They have designed those controls to ensure the receipt of all relevant information during those periods in which periodic reports are being prepared

Answer 10

Sarbanes - Oxley Act (SOX) Some issues include: • In addition, the signing officers certify that: o They have designed those controls to ensure the receipt of all relevant information during those periods in which periodic reports are being prepared

Answer 11

Sarbanes - Oxley Act (SOX) Some issues include: • In addition, the signing officers certify that: o They have designed those controls to ensure the receipt of all relevant information during those periods in which periodic reports are being prepared

Answer 12

Sarbanes - Oxley Act (SOX) Some issues include: • In addition, the signing officers certify that: o They have designed those controls to ensure the receipt of all relevant information during those periods in which periodic reports are being prepared

Answer 13

Sarbanes - Oxley Act (SOX) Some issues include: • In addition, the signing officers certify that: o They have designed those controls to ensure the receipt of all relevant information during those periods in which periodic reports are being prepared o They have evaluated the effectiveness of internal controls within 90 days prior to the report

Answer 14

Sarbanes - Oxley Act (SOX) Some issues include: • In addition, the signing officers certify that: o They have designed those controls to ensure the receipt of all relevant information during those periods in which periodic reports are being prepared o They have evaluated the effectiveness of internal controls within 90 days prior to the report

Answer 15

Sarbanes - Oxley Act (SOX) Some issues include: • In addition, the signing officers certify that: o They have designed those controls to ensure the receipt of all relevant information during those periods in which periodic reports are being prepared o They have evaluated the effectiveness of internal controls within 90 days prior to the report

Answer 16

Sarbanes - Oxley Act (SOX) Some issues include: • In addition, the signing officers certify that: o They have evaluated the effectiveness of internal controls within 90 days prior to the report

Answer 17

Sarbanes - Oxley Act (SOX) Some issues include: • In addition, the signing officers certify that: o They have evaluated the effectiveness of internal controls within 90 days prior to the report

Answer 18

Sarbanes - Oxley Act (SOX) Some issues include: • In addition, the signing officers certify that: o They have evaluated the effectiveness of internal controls within 90 days prior to the report

Answer 19

Sarbanes - Oxley Act (SOX) Some issues include: • In addition, the signing officers certify that: o They have evaluated the effectiveness of internal controls within 90 days prior to the report o They have presented their conclusions about the effectiveness of internal controls in the report

Answer 20

Sarbanes - Oxley Act (SOX) Some issues include: • In addition, the signing officers certify that: o They have evaluated the effectiveness of internal controls within 90 days prior to the report o They have presented their conclusions about the effectiveness of internal controls in the report

Answer 21

Sarbanes - Oxley Act (SOX) Some issues include: • In addition, the signing officers certify that: o They have presented their conclusions about the effectiveness of internal controls in the report

Answer 22

Sarbanes - Oxley Act (SOX) Some issues include: • In addition, the signing officers certify that: o They have presented their conclusions about the effectiveness of internal controls in the report

Answer 23

Sarbanes - Oxley Act (SOX) Some issues include: • In addition, the signing officers certify that: o They are responsible for establishing and maintaining internal controls o They have designed those controls to ensure the receipt of all relevant information during those periods in which periodic reports are being prepared o They have evaluated the effectiveness of internal controls within 90 days prior to the report o They have presented their conclusions about the effectiveness of internal controls in the report

Answer 24

Sarbanes - Oxley Act (SOX) Some issues include: • In addition, the signing officers certify that: o They are responsible for establishing and maintaining internal controls o They have designed those controls to ensure the receipt of all relevant information during those periods in which periodic reports are being prepared o They have evaluated the effectiveness of internal controls within 90 days prior to the report o They have presented their conclusions about the effectiveness of internal controls in the report

Answer 25

Sarbanes - Oxley Act (SOX) Some issues include: • Officers are also required to report to auditors and to the audit committee:

Answer 26

Sarbanes - Oxley Act (SOX) Some issues include: • Officers are also required to report to auditors and to the audit committee:

Answer 27

Sarbanes - Oxley Act (SOX) Some issues include: • Officers are also required to report to auditors and to the audit committee:

Answer 28

Sarbanes - Oxley Act (SOX) Some issues include: • Officers are also required to report to auditors and to the audit committee: o All significant deficiencies that could adversely affect the reporting process and any material weaknesses

Answer 29

Sarbanes - Oxley Act (SOX) Some issues include: • Officers are also required to report to auditors and to the audit committee: o All significant deficiencies that could adversely affect the reporting process and any material weaknesses

Answer 30

Sarbanes - Oxley Act (SOX) Some issues include: • Officers are also required to report to auditors and to the audit committee: o All significant deficiencies that could adversely affect the reporting process and any material weaknesses

Answer 31

Sarbanes - Oxley Act (SOX) Some issues include: • Officers are also required to report to auditors and to the audit committee: o All significant deficiencies that could adversely affect the reporting process and any material weaknesses

Answer 32

Sarbanes - Oxley Act (SOX) Some issues include: • Officers are also required to report to auditors and to the audit committee: o All significant deficiencies that could adversely affect the reporting process and any material weaknesses o Any fraud (whether material or not) involving management or employees with a role in internal controls

Answer 33

Sarbanes - Oxley Act (SOX) Some issues include: • Officers are also required to report to auditors and to the audit committee: o All significant deficiencies that could adversely affect the reporting process and any material weaknesses o Any fraud (whether material or not) involving management or employees with a role in internal controls

Answer 34

Sarbanes - Oxley Act (SOX) Some issues include: • Officers are also required to report to auditors and to the audit committee: o All significant deficiencies that could adversely affect the reporting process and any material weaknesses o Any fraud (whether material or not) involving management or employees with a role in internal controls

Answer 35

Sarbanes - Oxley Act (SOX) Some issues include: • Officers are also required to report to auditors and to the audit committee: o All significant deficiencies that could adversely affect the reporting process and any material weaknesses o Any fraud (whether material or not) involving management or employees with a role in internal controls

Answer 36

Sarbanes - Oxley Act (SOX) SOX created a variety of regulations and eliminated a significant portion of the accounting profession’s system of self-regulation. Some issues include: • Section 302 "Corporate Responsibility for Financial Reports” - requires that the principal executive officer and the principal financial officer, or their equivalents, certify as to certain items on each annual or quarterly report: o The signing officer has reviewed the report o Based on the signer’s knowledge, the report does not contain a material untrue statement or omit a material fact o Based on the signer’s knowledge, the financial statements and other information are fairly presented • In addition, the signing officers certify that: o They are responsible for establishing and maintaining internal controls o They have designed those controls to ensure the receipt of all relevant information during those periods in which periodic reports are being prepared o They have evaluated the effectiveness of internal controls within 90 days prior to the report o They have presented their conclusions about the effectiveness of internal controls in the report • Officers are also required to report to auditors and to the audit committee: o All significant deficiencies that could adversely affect the reporting process and any material weaknesses o Any fraud (whether material or not) involving management or employees with a role in internal controls

Answer 37

Basic Concepts and Internal Control Limitations Regardless of the good intentions of management, even a strong control environment combined with excellent control activities is subject to certain inherent limitations (COCO):

Answer 38

Basic Concepts and Internal Control Limitations Regardless of the good intentions of management, even a strong control environment combined with excellent control activities is subject to certain inherent limitations (COCO):

Answer 39

Basic Concepts and Internal Control Limitations Regardless of the good intentions of management, even a strong control environment combined with excellent control activities is subject to certain inherent limitations (COCO):

Answer 40

Basic Concepts and Internal Control Limitations Regardless of the good intentions of management, even a strong control environment combined with excellent control activities is subject to certain inherent limitations (COCO):

Answer 41

Basic Concepts and Internal Control Limitations Regardless of the good intentions of management, even a strong control environment combined with excellent control activities is subject to certain inherent limitations (COCO):

Answer 42

Basic Concepts and Internal Control Limitations Regardless of the good intentions of management, even a strong control environment combined with excellent control activities is subject to certain inherent limitations (COCO):

Answer 43

Basic Concepts and Internal Control Limitations Regardless of the good intentions of management, even a strong control environment combined with excellent control activities is subject to certain inherent limitations (COCO): * Collusion * Override by management * Competence/Human error * Obsolescence

Answer 44

Basic Concepts and Internal Control Limitations Regardless of the good intentions of management, even a strong control environment combined with excellent control activities is subject to certain inherent limitations (COCO): * Collusion * Override by management * Competence/Human error * Obsolescence

Answer 45

Basic Concepts and Internal Control Limitations Regardless of the good intentions of management, even a strong control environment combined with excellent control activities is subject to certain inherent limitations (COCO): * Collusion * Override by management * Competence/Human error * Obsolescence

Answer 46

Basic Concepts and Internal Control Limitations Regardless of the good intentions of management, even a strong control environment combined with excellent control activities is subject to certain inherent limitations (COCO): * Collusion * Override by management * Competence/Human error * Obsolescence

Answer 47

Basic Concepts and Internal Control Limitations Regardless of the good intentions of management, even a strong control environment combined with excellent control activities is subject to certain inherent limitations (COCO): * Collusion * Override by management * Competence/Human error * Obsolescence

Answer 48

Basic Concepts and Internal Control Limitations Regardless of the good intentions of management, even a strong control environment combined with excellent control activities is subject to certain inherent limitations (COCO): * Collusion * Override by management * Competence/Human error * Obsolescence

Answer 49

Basic Concepts and Internal Control Limitations Regardless of the good intentions of management, even a strong control environment combined with excellent control activities is subject to certain inherent limitations (COCO): * Collusion * Override by management * Competence/Human error * Obsolescence

Answer 50

Basic Concepts and Internal Control Limitations Regardless of the good intentions of management, even a strong control environment combined with excellent control activities is subject to certain inherent limitations (COCO): * Collusion * Override by management * Competence/Human error * Obsolescence

Answer 51

Basic Concepts and Internal Control Limitations Regardless of the good intentions of management, even a strong control environment combined with excellent control activities is subject to certain inherent limitations (COCO): * Collusion * Override by management * Competence/Human error * Obsolescence

Answer 52

Basic Concepts and Internal Control Limitations Regardless of the good intentions of management, even a strong control environment combined with excellent control activities is subject to certain inherent limitations (COCO): • Collusion – Control activities that depend on segregation of duties will not be effective if those engaged in the segregated functions conspire with one another.

Answer 53

Basic Concepts and Internal Control Limitations • Collusion – Control activities that depend on segregation of duties will not be effective if those engaged in the segregated functions conspire with one another.

Answer 54

Basic Concepts and Internal Control Limitations • Collusion – Control activities that depend on segregation of duties will not be effective if those engaged in the segregated functions conspire with one another.

Answer 55

Basic Concepts and Internal Control Limitations • Collusion – Control activities that depend on segregation of duties will not be effective if those engaged in the segregated functions conspire with one another.

Answer 56

Basic Concepts and Internal Control Limitations • Collusion – Control activities that depend on segregation of duties will not be effective if those engaged in the segregated functions conspire with one another.

Answer 57

Basic Concepts and Internal Control Limitations Regardless of the good intentions of management, even a strong control environment combined with excellent control activities is subject to certain inherent limitations (COCO): * Collusion * Override by management * Competence/Human error * Obsolescence • Override by management – Since management designs and implements the system of internal control, it is in a position to override it, so that even an effective internal control structure cannot be expected to prevent intentional misbehavior by management.

Answer 58

Basic Concepts and Internal Control Limitations • Override by management – Since management designs and implements the system of internal control, it is in a position to override it,

Answer 59

Basic Concepts and Internal Control Limitations • Override by management – Since management designs and implements the system of internal control, it is in a position to override it, so that even an effective internal control structure cannot be expected to prevent intentional misbehavior by management.

Answer 60

Basic Concepts and Internal Control Limitations • Override by management – Since management designs and implements the system of internal control, it is in a position to override it, so that even an effective internal control structure cannot be expected to prevent intentional misbehavior by management.

Answer 61

Basic Concepts and Internal Control Limitations • Override by management – Since management designs and implements the system of internal control, it is in a position to override it, so that even an effective internal control structure cannot be expected to prevent intentional misbehavior by management.

Answer 62

Basic Concepts and Internal Control Limitations • Override by management – Since management designs and implements the system of internal control, it is in a position to override it, so that even an effective internal control structure cannot be expected to prevent intentional misbehavior by management.

Answer 63

Basic Concepts and Internal Control Limitations • Override by management – Since management designs and implements the system of internal control, it is in a position to override it, so that even an effective internal control structure cannot be expected to prevent intentional misbehavior by management.

Answer 64

Basic Concepts and Internal Control Limitations • Override by management – Since management designs and implements the system of internal control, it is in a position to override it, so that even an effective internal control structure cannot be expected to prevent intentional misbehavior by management.

Answer 65

Basic Concepts and Internal Control Limitations • Override by management – Since management designs and implements the system of internal control, it is in a position to override it, so that even an effective internal control structure cannot be expected to prevent intentional misbehavior by management. This is one of the reasons the auditor must establish the integrity of management before accepting the engagement.

Answer 66

Basic Concepts and Internal Control Limitations • Override by management – Since management designs and implements the system of internal control, it is in a position to override it, so that even an effective internal control structure cannot be expected to prevent intentional misbehavior by management. This is one of the reasons the auditor must establish the integrity of management before accepting the engagement.

Answer 67

Basic Concepts and Internal Control Limitations • Override by management – Since management designs and implements the system of internal control, it is in a position to override it, so that even an effective internal control structure cannot be expected to prevent intentional misbehavior by management. This is one of the reasons the auditor must establish the integrity of management before accepting the engagement.

Answer 68

Basic Concepts and Internal Control Limitations • Override by management – Since management designs and implements the system of internal control, it is in a position to override it, so that even an effective internal control structure cannot be expected to prevent intentional misbehavior by management. This is one of the reasons the auditor must establish the integrity of management before accepting the engagement. It is also important to establish whether employee personnel have ever been asked to override systems of internal control by management.

Answer 69

Basic Concepts and Internal Control Limitations • Override by management – Since management designs and implements the system of internal control, it is in a position to override it, so that even an effective internal control structure cannot be expected to prevent intentional misbehavior by management. This is one of the reasons the auditor must establish the integrity of management before accepting the engagement. It is also important to establish whether employee personnel have ever been asked to override systems of internal control by management.

Answer 70

Basic Concepts and Internal Control Limitations • Override by management – Since management designs and implements the system of internal control, it is in a position to override it, so that even an effective internal control structure cannot be expected to prevent intentional misbehavior by management. This is one of the reasons the auditor must establish the integrity of management before accepting the engagement. It is also important to establish whether employee personnel have ever been asked to override systems of internal control by management.

Answer 71

Basic Concepts and Internal Control Limitations • Override by management – Since management designs and implements the system of internal control, it is in a position to override it, so that even an effective internal control structure cannot be expected to prevent intentional misbehavior by management. This is one of the reasons the auditor must establish the integrity of management before accepting the engagement. It is also important to establish whether employee personnel have ever been asked to override systems of internal control by management.

Answer 72

Basic Concepts and Internal Control Limitations • Override by management – Since management designs and implements the system of internal control, it is in a position to override it, so that even an effective internal control structure cannot be expected to prevent intentional misbehavior by management. This is one of the reasons the auditor must establish the integrity of management before accepting the engagement. It is also important to establish whether employee personnel have ever been asked to override systems of internal control by management.

Answer 73

Basic Concepts and Internal Control Limitations Regardless of the good intentions of management, even a strong control environment combined with excellent control activities is subject to certain inherent limitations (COCO): * Collusion * Override by management * Competence/Human error * Obsolescence • Competence/Human error – If control procedures are erroneously applied, they will not be effective. Internal control cannot be expected to prevent mistakes in human judgment (misjudgment).

Answer 74

Basic Concepts and Internal Control Limitations • Competence/Human error – If control procedures are erroneously applied, they will not be effective.

Answer 75

Basic Concepts and Internal Control Limitations • Competence/Human error – If control procedures are erroneously applied, they will not be effective.

Answer 76

Basic Concepts and Internal Control Limitations • Competence/Human error – If control procedures are erroneously applied, they will not be effective.

Answer 77

Basic Concepts and Internal Control Limitations • Competence/Human error – If control procedures are erroneously applied, they will not be effective. Internal control cannot be expected to prevent mistakes in human judgment (misjudgment).

Answer 78

Basic Concepts and Internal Control Limitations • Competence/Human error – If control procedures are erroneously applied, they will not be effective. Internal control cannot be expected to prevent mistakes in human judgment (misjudgment).

Answer 79

Basic Concepts and Internal Control Limitations • Competence/Human error – If control procedures are erroneously applied, they will not be effective. Internal control cannot be expected to prevent mistakes in human judgment (misjudgment).

Answer 80

Basic Concepts and Internal Control Limitations Regardless of the good intentions of management, even a strong control environment combined with excellent control activities is subject to certain inherent limitations (COCO): * Collusion * Override by management * Competence/Human error * Obsolescence • Obsolescence – A good internal control structure may cease to be effective due to changes in the company's operations or size, changes in technology, or other changes affecting the way the entity’s business is transacted.

Answer 81

Basic Concepts and Internal Control Limitations • Obsolescence – A good internal control structure may cease to be effective due to changes in the company's operations or size, changes in technology, or other changes affecting the way the entity’s business is transacted.

Answer 82

Basic Concepts and Internal Control Limitations • Obsolescence – A good internal control structure may cease to be effective due to changes in the company's operations or size, changes in technology, or other changes affecting the way the entity’s business is transacted.

Answer 83

Basic Concepts and Internal Control Limitations • Obsolescence – A good internal control structure may cease to be effective due to changes in the company's operations or size, changes in technology, or other changes affecting the way the entity’s business is transacted.

Answer 84

Basic Concepts and Internal Control Limitations • Obsolescence – A good internal control structure may cease to be effective due to changes in the company's operations or size, changes in technology, or other changes affecting the way the entity’s business is transacted.

Answer 85

Basic Concepts and Internal Control Limitations • Obsolescence – A good internal control structure may cease to be effective due to changes in the company's operations or size, changes in technology, or other changes affecting the way the entity’s business is transacted.

Answer 86

Basic Concepts and Internal Control Limitations Regardless of the good intentions of management, even a strong control environment combined with excellent control activities is subject to certain inherent limitations (COCO): * Collusion * Override by management * Competence/Human error * Obsolescence * Collusion – Control activities that depend on segregation of duties will not be effective if those engaged in the segregated functions conspire with one another. * Override by management – Since management designs and implements the system of internal control, it is in a position to override it, so that even an effective internal control structure cannot be expected to prevent intentional misbehavior by management. This is one of the reasons the auditor must establish the integrity of management before accepting the engagement. It is also important to establish whether employee personnel have ever been asked to override systems of internal control by management. * Competence/Human error – If control procedures are erroneously applied, they will not be effective. Internal control cannot be expected to prevent mistakes in human judgment (misjudgment). * Obsolescence – A good internal control structure may cease to be effective due to changes in the company's operations or size, changes in technology, or other changes affecting the way the entity’s business is transacted.

Answer 87

Basic Concepts and Internal Control Limitations Inherent limitations (COCO): * Collusion – Control activities that depend on segregation of duties will not be effective if those engaged in the segregated functions conspire with one another. * Override by management – Since management designs and implements the system of internal control, it is in a position to override it, so that even an effective internal control structure cannot be expected to prevent intentional misbehavior by management. This is one of the reasons the auditor must establish the integrity of management before accepting the engagement. It is also important to establish whether employee personnel have ever been asked to override systems of internal control by management. * Competence/Human error – If control procedures are erroneously applied, they will not be effective. Internal control cannot be expected to prevent mistakes in human judgment (misjudgment). * Obsolescence – A good internal control structure may cease to be effective due to changes in the company's operations or size, changes in technology, or other changes affecting the way the entity’s business is transacted.

Answer 88

Internal Control It is essential to keep in mind the concept of reasonable assurance as it relates to internal control, taking into account the cost/benefit factor.

Answer 89

Internal Control It is essential to keep in mind the concept of reasonable assurance as it relates to internal control, taking into account the cost/benefit factor.

Answer 90

Internal Control It is essential to keep in mind the concept of reasonable assurance as it relates to internal control, taking into account the cost/benefit factor.

Answer 91

Internal Control It is essential to keep in mind the concept of reasonable assurance as it relates to internal control, taking into account the cost/benefit factor. Even if it were possible to design a perfect system of internal control, management would not do so, since there are costs involved in any action, and the costs of the internal control structure should not exceed the benefits.

Answer 92

Internal Control It is essential to keep in mind the concept of reasonable assurance as it relates to internal control, taking into account the cost/benefit factor. Even if it were possible to design a perfect system of internal control, management would not do so, since there are costs involved in any action, and the costs of the internal control structure should not exceed the benefits.

Answer 93

Internal Control It is essential to keep in mind the concept of reasonable assurance as it relates to internal control, taking into account the cost/benefit factor. Even if it were possible to design a perfect system of internal control, management would not do so, since there are costs involved in any action, and the costs of the internal control structure should not exceed the benefits.

Answer 94

Internal Control It is essential to keep in mind the concept of reasonable assurance as it relates to internal control, taking into account the cost/benefit factor. Even if it were possible to design a perfect system of internal control, management would not do so, since there are costs involved in any action, and the costs of the internal control structure should not exceed the benefits.

Answer 95

Internal Control It is essential to keep in mind the concept of reasonable assurance as it relates to internal control, taking into account the cost/benefit factor. Even if it were possible to design a perfect system of internal control, management would not do so, since there are costs involved in any action, and the costs of the internal control structure should not exceed the benefits. As a result, management may sometimes reasonably refuse to remedy a deficiency in internal control that it knows exists.

Answer 96

Internal Control It is essential to keep in mind the concept of reasonable assurance as it relates to internal control, taking into account the cost/benefit factor. Even if it were possible to design a perfect system of internal control, management would not do so, since there are costs involved in any action, and the costs of the internal control structure should not exceed the benefits. As a result, management may sometimes reasonably refuse to remedy a deficiency in internal control that it knows exists.

Answer 97

Internal Control The auditor is required to respond to management override of controls

Answer 98

Internal Control The auditor is required to respond to management override of controls

Answer 99

Internal Control The auditor is required to respond to management override of controls

Answer 100

Internal Control The auditor is required to respond to management override of controls – Because management is often in a position to override controls in order to commit financial statement fraud,

Answer 101

Internal Control The auditor is required to respond to management override of controls – Because management is often in a position to override controls in order to commit financial statement fraud,

Answer 102

Internal Control The auditor is required to respond to management override of controls – Because management is often in a position to override controls in order to commit financial statement fraud, the standard includes procedures to test for management override of controls on every audit.

Answer 103

Internal Control The auditor is required to respond to management override of controls – Because management is often in a position to override controls in order to commit financial statement fraud, the standard includes procedures to test for management override of controls on every audit.

Answer 104

Internal Control The auditor is required to respond to management override of controls – Because management is often in a position to override controls in order to commit financial statement fraud, the standard includes procedures to test for management override of controls on every audit.

Answer 105

Internal Control It should be noted that even a properly planned and performed audit may not detect a material misstatement resulting from fraud because of

Answer 106

Internal Control It should be noted that even a properly planned and performed audit may not detect a material misstatement resulting from fraud because of

Answer 107

Internal Control It should be noted that even a properly planned and performed audit may not detect a material misstatement resulting from fraud because ofs.

Answer 108

Internal Control It should be noted that even a properly planned and performed audit may not detect a material misstatement resulting from fraud because of

Answer 109

Internal Control It should be noted that even a properly planned and performed audit may not detect a material misstatement resulting from fraud because of (1) concealment aspects of fraudulent activity,

Answer 110

Internal Control It should be noted that even a properly planned and performed audit may not detect a material misstatement resulting from fraud because of (1) concealment aspects of fraudulent activity, including the fact that fraud often involves collusion or falsified documents,

Answer 111

Internal Control It should be noted that even a properly planned and performed audit may not detect a material misstatement resulting from fraud because of (1) concealment aspects of fraudulent activity, including the fact that fraud often involves collusion or falsified documents, .

Answer 112

Internal Control It should be noted that even a properly planned and performed audit may not detect a material misstatement resulting from fraud because of (1) concealment aspects of fraudulent activity, including the fact that fraud often involves collusion or falsified documents,

Answer 113

Internal Control It should be noted that even a properly planned and performed audit may not detect a material misstatement resulting from fraud because of (1) concealment aspects of fraudulent activity, including the fact that fraud often involves collusion or falsified documents, and (2) the need to apply professional judgment in the identification

Answer 114

Internal Control It should be noted that even a properly planned and performed audit may not detect a material misstatement resulting from fraud because of (1) concealment aspects of fraudulent activity, including the fact that fraud often involves collusion or falsified documents, and (2) the need to apply professional judgment in the identification

Answer 115

Internal Control It should be noted that even a properly planned and performed audit may not detect a material misstatement resulting from fraud because of (1) concealment aspects of fraudulent activity, including the fact that fraud often involves collusion or falsified documents, and (2) the need to apply professional judgment in the identification or evaluation of fraud risk factors and other conditions.

Answer 116

Internal Control It should be noted that even a properly planned and performed audit may not detect a material misstatement resulting from fraud because of (1) concealment aspects of fraudulent activity, including the fact that fraud often involves collusion or falsified documents, and (2) the need to apply professional judgment in the identification or evaluation of fraud risk factors and other conditions.

Answer 117

Internal Control It should be noted that even a properly planned and performed audit may not detect a material misstatement resulting from fraud because of (1) concealment aspects of fraudulent activity, including the fact that fraud often involves collusion or falsified documents, and (2) the need to apply professional judgment in the identification or evaluation of fraud risk factors and other conditions.

Answer 118

Internal Control It should be noted that even a properly planned and performed audit may not detect a material misstatement resulting from fraud because of (1) concealment aspects of fraudulent activity, including the fact that fraud often involves collusion or falsified documents, and (2) the need to apply professional judgment in the identification or evaluation of fraud risk factors and other conditions.

Answer 119

Internal Control It should be noted that even a properly planned and performed audit may not detect a material misstatement resulting from fraud because of (1) concealment aspects of fraudulent activity, including the fact that fraud often involves collusion or falsified documents, and (2) the need to apply professional judgment in the identification or evaluation of fraud risk factors and other conditions.

Answer 120

Internal Control The auditor is required to respond to management override of controls – Because management is often in a position to override controls in order to commit financial-statement fraud, the standard includes procedures to test for management override of controls on every audit. It should be noted that even a properly planned and performed audit may not detect a material misstatement resulting from fraud because of (1) concealment aspects of fraudulent activity, including the fact that fraud often involves collusion or falsified documents, and (2) the need to apply professional judgment in the identification or evaluation of fraud risk factors and other conditions.

Answer 121

SOX = Sarbanes - Oxley Act

Answer 122

Sarbanes - Oxley Act eliminated a significant portion of the accounting profession’s system of self-regulation.

Answer 123

Sarbanes - Oxley Act eliminated a significant portion of the accounting profession’s system of self-regulation.

Answer 124

SOX eliminated a significant portion of the accounting profession’s system of self-regulation.

Answer 125