Chapter 7+ ACTG 313 Test With
Complete Solution
7-1.1 What is the name of the law that Congress passed to prevent financial
statement fraud, make financial reports more transparent, protect investors,
strengthen internal controls, and punish executives who perpetrate fraud?
a)COSO ERM Act
b)COBIT Act
c)Foreign Corrupt Practices Act
d)Sarbanes Oxley Act
e)COSO Internal Control Act - ANSWER d
7-1.2 What is the name of the law Congress passed to prevent companies
from bribing foreign officials?
a)COBIT Act
b)COSO ERM Act
c)Sarbanes Oxley Act
d)COSO Internal Control Act
e)FCPA - ANSWER e
7-2.1 The COBIT 5 framework describes best practices for the effective
governance and management of IT. It is based on five key principles of IT
governance and management. Which of the following are among the five key
,principles? (Check all that apply.)
a)Enabling a holistic approach
b)Coordinating multiple different frameworks
c)Covering the enterprise end-to-end
d)Integrating governance and management
e)Meeting stakeholders' needs - ANSWER a,c,e
7-2.2 Which of the following are basic principles upon which the ERM is
built? (Check all that apply.)
a)The ERM framework can manage uncertainty, but not the ability to create
value.
b)Each employee must decide for himself how much uncertainty he will
accept as he creates value.
c)Companies are formed to create value for management and the
government.
d)Uncertainty results in the possibility that something can positively affect
the company's ability to create value.
e)Uncertainty results in the possibility that something can negatively affect
the company's ability to create value. - ANSWER d,e
7-2.3 COSO Internal Controls has five components. COSO ERM has the same
five components, with an additional three components added. Which of the
following are among the three added components? (Check all that apply.)
a)Risk response
,b)Information and communication
c)Objective setting
d)Event identification
e)Risk assessment
f)Control activities - ANSWER a,c,d
7-3.1 Which of the following are part of an internal environment? (Check all
that apply.)
a)Principles of value creation
b)Management's philosophy, operating style, and risk appetite
c)Commitment to integrity, ethical values, and competence
d)Effective management to auditor communication
e)Internal control oversight by the board of directors - ANSWER b,c,e
7-3.2 Which of the following is part of an internal environment? (Check all
that apply.)
a)Organizational structure
b)Commitment to risk assessment and response
c)Monitoring the achievement of management objectives
d)Methods of assigning authority and responsibility
e)Human resource standards that attract, develop, and retain competent
individuals - ANSWER a,d,e
7-3.3 Which of the following are ways that companies endorse integrity?
, (Check all that apply.)
a)Making a commitment to competence, and hiring employees with the
necessary knowledge, experience, training, and skills
b)Consistently rewarding achievements and giving verbal labels to both high
and low producers
c)Implementing aggressive sales practices and handsomely rewarding those
who achieve them and not giving bonuses to those who underachieve
d)Requiring employees to report dishonest or illegal acts, and disciplining
employees who knowingly fail to report them
e)Actively making employees aware that favorable outcomes and reports are
more important than almost anything else
f)Developing a written code of conduct that explicitly describes honest and
dishonest behaviors - ANSWER a,d,f
7-3.4 Which of the following are Human Resources standards that attract,
develop, and retain competent employees? (Check all that apply.)
a)Rotate employee duties periodically, and require all employees to take an
annual vacation.
b)Train new employees on their responsibilities, expected levels of
performance and behavior, and the company's policies and procedures.
c)Evaluate, compensate, and promote employees based more on subjective
criteria than performance.
d)Hire employees based on educational background, experience,
achievements, integrity, and meeting written job requirements.
Complete Solution
7-1.1 What is the name of the law that Congress passed to prevent financial
statement fraud, make financial reports more transparent, protect investors,
strengthen internal controls, and punish executives who perpetrate fraud?
a)COSO ERM Act
b)COBIT Act
c)Foreign Corrupt Practices Act
d)Sarbanes Oxley Act
e)COSO Internal Control Act - ANSWER d
7-1.2 What is the name of the law Congress passed to prevent companies
from bribing foreign officials?
a)COBIT Act
b)COSO ERM Act
c)Sarbanes Oxley Act
d)COSO Internal Control Act
e)FCPA - ANSWER e
7-2.1 The COBIT 5 framework describes best practices for the effective
governance and management of IT. It is based on five key principles of IT
governance and management. Which of the following are among the five key
,principles? (Check all that apply.)
a)Enabling a holistic approach
b)Coordinating multiple different frameworks
c)Covering the enterprise end-to-end
d)Integrating governance and management
e)Meeting stakeholders' needs - ANSWER a,c,e
7-2.2 Which of the following are basic principles upon which the ERM is
built? (Check all that apply.)
a)The ERM framework can manage uncertainty, but not the ability to create
value.
b)Each employee must decide for himself how much uncertainty he will
accept as he creates value.
c)Companies are formed to create value for management and the
government.
d)Uncertainty results in the possibility that something can positively affect
the company's ability to create value.
e)Uncertainty results in the possibility that something can negatively affect
the company's ability to create value. - ANSWER d,e
7-2.3 COSO Internal Controls has five components. COSO ERM has the same
five components, with an additional three components added. Which of the
following are among the three added components? (Check all that apply.)
a)Risk response
,b)Information and communication
c)Objective setting
d)Event identification
e)Risk assessment
f)Control activities - ANSWER a,c,d
7-3.1 Which of the following are part of an internal environment? (Check all
that apply.)
a)Principles of value creation
b)Management's philosophy, operating style, and risk appetite
c)Commitment to integrity, ethical values, and competence
d)Effective management to auditor communication
e)Internal control oversight by the board of directors - ANSWER b,c,e
7-3.2 Which of the following is part of an internal environment? (Check all
that apply.)
a)Organizational structure
b)Commitment to risk assessment and response
c)Monitoring the achievement of management objectives
d)Methods of assigning authority and responsibility
e)Human resource standards that attract, develop, and retain competent
individuals - ANSWER a,d,e
7-3.3 Which of the following are ways that companies endorse integrity?
, (Check all that apply.)
a)Making a commitment to competence, and hiring employees with the
necessary knowledge, experience, training, and skills
b)Consistently rewarding achievements and giving verbal labels to both high
and low producers
c)Implementing aggressive sales practices and handsomely rewarding those
who achieve them and not giving bonuses to those who underachieve
d)Requiring employees to report dishonest or illegal acts, and disciplining
employees who knowingly fail to report them
e)Actively making employees aware that favorable outcomes and reports are
more important than almost anything else
f)Developing a written code of conduct that explicitly describes honest and
dishonest behaviors - ANSWER a,d,f
7-3.4 Which of the following are Human Resources standards that attract,
develop, and retain competent employees? (Check all that apply.)
a)Rotate employee duties periodically, and require all employees to take an
annual vacation.
b)Train new employees on their responsibilities, expected levels of
performance and behavior, and the company's policies and procedures.
c)Evaluate, compensate, and promote employees based more on subjective
criteria than performance.
d)Hire employees based on educational background, experience,
achievements, integrity, and meeting written job requirements.
