Cengage Mindtap AIS Chapter 7 Quiz
Q1. The key provisions of SOX are that SOX:
- Increased accountability of company officers and directors
- Strengthened auditor independence rules
- All of these choices
- Created a new accounting oversight board
Q2. Elements common to definitions of internal control include all of the following, except:
- Compliance with applicable laws and regulations
- Effectiveness of operations
- Reliability of financial reporting
- Automation of business processes
Q3. The difference between risks and opportunities is:
- Risks could have a positive impact and opportunities could have a negative impact on the organization’s objectives.
- Opportunities require response, whereas risks are channeled back to the strategy-setting process.
- Risks and opportunities are identified through risk identification.
- Risks could have a negative impact and opportunities could have a positive impact on the organization’s objectives.
Q4. Risk responses do not include:
- Sharing a risk by, for example, buying insurance or outsourcing the activity
- Staying in the activity that is giving rise to the risk
- Accepting a risk by taking no action
- Reducing a risk by taking actions that reduce the likelihood of an event
Q5. The eight elements of ERM do not include:
- Issue management
- Objective setting
- Risk management
- Information and communication
Q6. Who is responsible for creating an organization’s control environment?
Q7. What is the relationship between fraud and internal control?
- Includes cost center accounting, profitability analysis for sales, activity-based accounting, and budgeting
- Foreign Corrupt
- Includes recording customer orders, shipping goods to the customer, but not billing customers
- Internal control must be designed to address the risks of fraud
Q8. Organizational governance is:
- Tactical management
- Day to day management of the organization
- A process by which organizations select objectives, establish processes to achieve objectives, and monitor performance
Q9. Enterprise Risk Management (ERM):
- Provides reasonable assurance regarding the achievement of entity objectives
- All of these choices are correct are features of an ERM
- Is designed to manage risk
- Is the responsibility of an entity’s board of directors, management, and other personnel
Q10. ______control plans relate to a multitude of goals and processes and business _______control plans relate to the technology used to implement the process
- Process, pervasive
- IT, general
- General, IT
- Pervasive, process