A3 - Internal Control

Question 1

What are the five components of the COSO framework for internal control?

Answer 1

CRIME
Control environment
Risk assessment
Information and communication systems
Monitoring
Existing control activities

Question 2

What are the control activites that will assure a strong system of internal control?

Answer 2

PAID TIPS
Prenumbered documents
Authorized transactions
Independent checks
Documentation
Timely/appropriate performance reviews
Information processing controls
Physical controls
Segregation of duties

Question 3

What are the three elements of segregation of duties?

Answer 3

ARC
Authorization
Record keeping
Custody

Question 4

T/F: The cost-benefit relationship is a primary criterion that should be considered in designing internal control

Answer 4

True

Question 5

What is the ultimate purpose of assessing control risk?

Answer 5

To contribute to the auditor’s evaluation of the risk that material misstatements may exist in the financial statements

Question 6

T/F: The more information technology used in an audit, the less extensive the documentation will be

Answer 6

False