4.2 Learning Objective 4-2
1) The primary way that fraud and unintentional errors in financial statements are prevented is by external auditors.
2) External auditors are responsible for maintaining the internal controls for each company they audit.
3) All employees should have a background check before being hired, and should be properly trained and supervised.
4) Small companies cannot have internal controls since they do not have enough employees to segregate duties.
5) The Sarbanes-Oxley Act created the American Institute of Certified Public Accountants to oversee the audits of public companies.
6) Access to sensitive data files in a business should be protected by Trojan horses.
7) Collusion is the method used to defeat an internal controls system.
8) Smart hiring practices and separation of duties is part of the control environment.
9) Which is NOT an objective of an internal control system?
A) Safeguarding of assets
B) Compliance with company policies
C) Compliance with legal requirements
D) Risk assessment
10) The objectives of internal control do NOT include:
A) compliance with standards of social responsibility.
B) safeguard assets.
C) promoting operational efficiency.
D) compliance with legal requirements.