Acct 430 Exam 1 Latest Questions
with Guaranteed Pass Solutions 2025-
2026 Updated.
company risks - Answer operational
competitive
macro-economic
regulatory
legal
global
piracy/crime
who are the stakeholders/users of financial information - Answer management
shareholders
banks/bondholders
auditors
regulators
customers
suppliers
what are controls? - Answer Set of activities used to guide, manage, and regulate toward a
directive
What is COSO? - Answer Committee of Sponsoring Organizations of the Treadway Commission
What does COSO do? - Answer They are dedicated to improving the quality of financial
reporting through business ethics, effective internal controls, and corporate governance.
Who sponsors COSO? - Answer The American Accounting Association (AAA)
The American Institute of Certified Public Accountants (AICPA)
Financial Executives International (FEI)
,2. Reliability of financial reporting
3. Compliance with applicable laws and regulations
which COSO goal is most important to an external auditor? - Answer Compliance with
applicable laws and regulations
5 components of internal control - Answer 1. Control Environment
2. Risk Assessment
3. Control Activities
4. Information and Communication
5. Monitoring
what is the control environment? - Answer sets the overall controls tone of an organization
- Foundation for all other components
-"Tone at the top"
-Ethics
-corporate governance
-company culture
-value placed on internal controls and financial reporting
what is risk assessment? - Answer Identification and analysis of relevant risks to achievement
of org's objectives
Risk of :
- misappropriation (stealing)
-misrepresentation (fraudulent reporting)
-conflict of interest (related parties)
-going out of business
what are control activities? - Answer Policies and procedures to ensure that help to ensure
management's directives are carried out
-approvals/authorizations
-verifications/reconciliations
, what is information and communication? - Answer Important info is captured and
communicated so that employees can carry out their responsibilities for control activities
- internal report on internal operations (performance evals)
-internal reports on external events (benchmarking)
-effective communication in all directions
-management must communicate importance of internal control and financial reporting quality
what is monitoring? - Answer Assessing whether the system of internal control works as
intended, and reporting any weaknesses to the board/management
-have routine checks by internal auditor
-reports reviewed by management
-internal auditors conduct special investigations
benefits of strong internal controls - Answer -increased operational effectiveness
-reliable financial reporting
-increased profitability
-improved documentation of control processes
-improved definition of controls across the organization
-mitigate organizational risks (operational, financial, performance)
-compliance with laws and regulations
what are internal controls? - Answer Steps, processes, systems that a company puts in place to
try to catch/monitor a potential exposure that could result in error, omission, misstatement, or
fraud.
objectives of internal controls? - Answer 1. Accurate reliable financial statements
2. Safeguarding of assets
non-financial control objectives - Answer -operational control
-operational efficiency
-profitability
with Guaranteed Pass Solutions 2025-
2026 Updated.
company risks - Answer operational
competitive
macro-economic
regulatory
legal
global
piracy/crime
who are the stakeholders/users of financial information - Answer management
shareholders
banks/bondholders
auditors
regulators
customers
suppliers
what are controls? - Answer Set of activities used to guide, manage, and regulate toward a
directive
What is COSO? - Answer Committee of Sponsoring Organizations of the Treadway Commission
What does COSO do? - Answer They are dedicated to improving the quality of financial
reporting through business ethics, effective internal controls, and corporate governance.
Who sponsors COSO? - Answer The American Accounting Association (AAA)
The American Institute of Certified Public Accountants (AICPA)
Financial Executives International (FEI)
,2. Reliability of financial reporting
3. Compliance with applicable laws and regulations
which COSO goal is most important to an external auditor? - Answer Compliance with
applicable laws and regulations
5 components of internal control - Answer 1. Control Environment
2. Risk Assessment
3. Control Activities
4. Information and Communication
5. Monitoring
what is the control environment? - Answer sets the overall controls tone of an organization
- Foundation for all other components
-"Tone at the top"
-Ethics
-corporate governance
-company culture
-value placed on internal controls and financial reporting
what is risk assessment? - Answer Identification and analysis of relevant risks to achievement
of org's objectives
Risk of :
- misappropriation (stealing)
-misrepresentation (fraudulent reporting)
-conflict of interest (related parties)
-going out of business
what are control activities? - Answer Policies and procedures to ensure that help to ensure
management's directives are carried out
-approvals/authorizations
-verifications/reconciliations
, what is information and communication? - Answer Important info is captured and
communicated so that employees can carry out their responsibilities for control activities
- internal report on internal operations (performance evals)
-internal reports on external events (benchmarking)
-effective communication in all directions
-management must communicate importance of internal control and financial reporting quality
what is monitoring? - Answer Assessing whether the system of internal control works as
intended, and reporting any weaknesses to the board/management
-have routine checks by internal auditor
-reports reviewed by management
-internal auditors conduct special investigations
benefits of strong internal controls - Answer -increased operational effectiveness
-reliable financial reporting
-increased profitability
-improved documentation of control processes
-improved definition of controls across the organization
-mitigate organizational risks (operational, financial, performance)
-compliance with laws and regulations
what are internal controls? - Answer Steps, processes, systems that a company puts in place to
try to catch/monitor a potential exposure that could result in error, omission, misstatement, or
fraud.
objectives of internal controls? - Answer 1. Accurate reliable financial statements
2. Safeguarding of assets
non-financial control objectives - Answer -operational control
-operational efficiency
-profitability
