CPFO Governmental Accounting, Auditing and Financial Reporting Practice Test Questions and Answers with complete solution

CPFO Governmental Accounting, Auditing and Financial Reporting Practice Test Ultimate responsibility for internal controls rests with. A. Management B. The governing board C. The external auditor D. The audit committee - ✔✔ B. The governing board. While management is primarily responsible for internal control, the governing body remains ultimately responsible for ensuring that mangement meets its respon sibilities in this regard. P 734 -735 Which of the following types of fraud is least likely in an environment where cash receipting and record keeping for accounts receivable are adequately segregated? A. Lapping B. Pilfering C. False claims D. Charge -off fraud - ✔✔ A. Lapping. What is the best way to select a sample to test internal controls? A. Block sampling B. Internal sampling C. Random sampling D. Blind sampling - ✔✔ C. Random Sampling All of the following are examples of inherent risk except: A. Size B. Complexity C. Cash receipts D. Prior problems - ✔✔ A. Size. There are 5 situations commonly recognized as inherent risk. 1. Complexity 2. Cash receipts 3. Direct payments to third -party beneficiaries 4. Hsitory of prior problems 5. History of prior unresponsiveness to identical control deficiencies P 740 Which is not an example of a control procedure? A. Authorization B. Segregation of incompatible duties C. Analytical review D. Mandatory holidays - ✔✔ D. Mandatory holidays. There are 7 categories of control -related policies. 1. Procedures to ensure that transactions are properly authorized 2. Control to secure assets and accounting records 3. Segregation of incompatible duties 4. Periodic reconciliations 5. Periodic verificatins 6. Analytical review of accounting data for reasonableness 7. Properly designed records Which of the following is the most important element in a comprehensive framework of internal controls? A. Monitoring B. Risk assessment C. Communication D. Control env ironment - ✔✔ D. Control environment. It must provide a favorable control environment. P 736.