CPFO Governmental Accounting, Auditing
and Financial Reporting UPDATED
ACTUAL Exam Questions and CORRECT
Answers
Ultimate responsibility for internal controls rests with.
A. Management
B. The governing board
C. The external auditor
D. The audit committee - CORRECT ANSWER - B. The governing board. While
management is primarily responsible for internal control, the governing body remains ultimately
responsible for ensuring that mangement meets its responsibilities 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 - CORRECT ANSWER - 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 - CORRECT ANSWER - C. Random Sampling
All of the following are examples of inherent risk except:
A. Size
, B. Complexity
C. Cash receipts
D. Prior problems - CORRECT ANSWER - 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 - CORRECT ANSWER - 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
and Financial Reporting UPDATED
ACTUAL Exam Questions and CORRECT
Answers
Ultimate responsibility for internal controls rests with.
A. Management
B. The governing board
C. The external auditor
D. The audit committee - CORRECT ANSWER - B. The governing board. While
management is primarily responsible for internal control, the governing body remains ultimately
responsible for ensuring that mangement meets its responsibilities 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 - CORRECT ANSWER - 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 - CORRECT ANSWER - C. Random Sampling
All of the following are examples of inherent risk except:
A. Size
, B. Complexity
C. Cash receipts
D. Prior problems - CORRECT ANSWER - 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 - CORRECT ANSWER - 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
