LO6-1 Identify the key elements of a strong system of internal control

Sarbanes Oxley is a major fraud case that motivated Congress to establish rules governing internal control. This statement is

Multiple Choice

• true.

• false.

false

Internal control is a process designed to ensure

Multiple Choice

• reliable financial reporting.

• effective and efficient operations.

• compliance with applicable laws and regulations.

• Internal control is designed to ensure all of the items described in the answers.

  Correct

Internal control is designed to ensure all of the items described in the answers.

The framework that is used to assess the effectiveness of a company’s internal control was established by the

Multiple Choice

• Securities and Exchange Commission.

• Financial Accounting Standards Board.

• Committee of Sponsoring Organizations of the Treadway Commission.

  Correct

• American Institute of Certified Public Accountants.

Committee of Sponsoring Organizations of the Treadway Commission.

The Committee of Sponsoring Organizations (COSO) framework for the evaluation of internal controls contains which of the following interrelated components?

Multiple Choice

• Risk assessment

• Information and communication

• Monitoring

• All of the answers are components of the COSO framework

  Correct

All of the answers are components of the COSO framework

Which of the following is not a commonly accepted internal control activity?

Multiple Choice

• Hiring only college graduates

  Correct

• Separation of duties

• Requiring employee absences

• Using prenumbered documents

Hiring only college graduates

The implementation of an effective internal control system eliminates the possibility of fraud. This statement is

Multiple Choice

• true.

• false.

false