Week 5 exam
Internal Control and Sarbanes-Oxley Quiz
Test your knowledge on internal controls, the Sarbanes-Oxley Act, and financial reporting with our comprehensive quiz. Designed for students, professionals, and anyone interested in the world of finance, this quiz covers key concepts surrounding internal controls in business.
Key Topics:
- Sarbanes-Oxley Act
- Internal Control Objectives
- Control Environment
- Monitoring and Assessment
Sarbanes-Oxley’s purpose is to improve financial reporting.
True
False
There are two internal control objectives and they are to ensure accurate financial reports, and ensure compliance with applicable laws.
True
False
Sarbanes-Oxley requires companies to maintain strong and effective internal controls and thus prevent fraud and misleading financial statements.
True
False
The Sarbanes-Oxley Act requires that financial statements of all public companies report on management's conclusions about the effectiveness of the company's internal control procedures.
True
False
The control environment in an internal control structure is the attitude and awareness of internal control by all employees.
True
False
Separating the responsibilities for purchasing, receiving, and paying for equipment is an example of the control procedure: separating operations, custody of assets, and accounting.
True
False
Internal control is enhanced by separating the control of a transaction from the record-keeping function
True
False
A backlog in recording transactions is an example of a warning sign from the accounting system.
True
False
Which one of the following below is not an element of internal control?
Risk assessment
Monitoring
Information and communication
Behaviour analysis
Which one of the following below is not a factor that influences a business's control environment?
Management's philosophy and operating style
Organisational structure
Proofs and security measures
Personnel policies
When a firm uses internal auditors, it is adhering to which one of the following internal control elements?
Risk assessment
Monitoring
Proofs and security measures
Separating responsibilities for related operations
The objectives of internal control are to
Control the internal organisation of the accounting department personnel and equipment
Provide reasonable assurance that operations are managed to achieve goals, financial reports are accurate, and laws and regulations are complied with
Prevent fraud, and promote the social interest of the company
Provide control over "internal-use only" reports and employee internal conduct
Which one of the following below reflects a weak internal control system?
All employees are well supervised
A single employee is responsible for comparing a receiving report to an invoice
All employees must take their vacations
A single employee is responsible for collecting and recording of cash
Internal control does not consist of policies and procedures that
Protect assets from misuse
Aid management in directing operations toward achieving business goals
Guarantee the company will not go bankrupt
Ensure that business information is accurate
A firm's internal control environment is not influenced by
Management's operating style
Organisational structure
Personnel policies
Monitoring policies
An element of internal control is
Risk assessment
Journals
Subsidiary ledgers
Controlling accounts
A necessary element of internal control is
Database
Systems design
Systems analysis
Information and communication
In management's internal control report that is now required of all public companies, which of the following does not have a direct effect on a company's internal control system?
Internal auditors
Independent accountants
Board of Director's audit committee
Board of Trustees
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