Test Bank for Information Technology Auditing, 4th Edition – James Hall | Verified Questions | 2025/2026 Latest Update

, ITAuditing4thEd—TestBank,Chapter1
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Chapter1—AuditingandInternal Control
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TRUE/FALSE

1. Corporatemanagement(includingtheCEO)mustcertifymonthlyandannuallytheirorganization’s
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internal controls over financial reporting.
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ANS: F h PTS: 1 h h




2. Both the SECandthePCAOB requiremanagement to usetheCOBITframework forassessing internal control
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adequacy.
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ANS: F h PTS: 1 h h




3. Both the SECandthePCAOB requiremanagement to usetheCOSOframework for assessing internal control
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adequacy.
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ANS: F h PTS: 1 h h




4. Aqualifiedopiniononmanagement’sassessmentofinternalcontrolsoverthefinancialreportingsystem
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necessitates a qualified opinion on the financial statements?
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ANS: F h PTS: 1 h h




5. Thesameinternal controlobjectives applytomanualandcomputer-basedinformationsystems.
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ANS: T h PTS: 1 h h




6. Theexternal auditor is responsibleforestablishingandmaintainingtheinternalcontrolsystem.
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ANS: F h PTS: 1 h h




7. Segregationof duties is anexampleofan internal control procedure. h h h h h h h h h h




ANS: T h PTS: 1 h h




8. Preventivecontrolsarepassive techniques designedtoreduce fraud. h h h h h h h h




ANS: T h PTS: 1 h h




9. A keymodifyingassumptionininternal control is thattheinternal control systemisthe responsibility of
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management.
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ANS: T h PTS: 1 h h




© 2016 Cengage Learning®. May not be scanned, copied or duplicated or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license
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distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use.
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, ITAuditing4thEd—TestBank,Chapter1
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10. WhiletheSarbanes-OxleyAct prohibits auditors fromprovidingnon-accountingservicestotheiraudit
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clients, they are not prohibited from performing such services for non-audit clients or privately held
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companies.
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ANS: T h PTS: 1 h h




11. TheSarbanes-OxleyActrequires theaudit committeeto hireandoversee the external auditors.
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ANS: T h PTS: 1 h h




12. Section404requiresthatcorporatemanagement(includingtheCEO)certifytheirorganization’sinternal
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controls on a quarterly and annual basis.
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ANS: F h PTS: 1 h h




13. Section 302requiresthemanagement of publiccompaniestoassess andformally report onthe
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effectiveness of their organization’s internal controls.
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ANS: F h PTS: 1 h h




14. Applicationcontrolsapplytoa wide range of exposuresthat threaten the integrity ofall programs
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processed within the computer environment.
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ANS: F h PTS: 1 h h




15. Advisoryservicesisanemergingfieldthatgoesbeyond theauditor’straditional attestation function.
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ANS: T h PTS: 1 h h




16. AnITauditor expresses anopinion onthefairness of thefinancial statements.
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ANS: F h PTS: 1 h h




17. Externalauditingisanindependent appraisal functionestablishedwithinanorganizationtoexamineand
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evaluate its activities as a service to the organization.
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ANS: F h PTS: 1 h h




18. Externalauditorscancooperatewithanduseevidencegatheredbyinternalaudit departments thatare
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organizationally independent and that report to theAudit Committee of the Board of Directors.
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© 2016 Cengage Learning®. May not be scanned, copied or duplicated or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license
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distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use.
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, ITAuditing4thEd—TestBank,Chapter1
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ANS: T h PTS: 1 h h




19. Testsofcontrolsdeterminewhetherthedatabasecontentsfairlyreflecttheorganization'stransactions.
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ANS: F h PTS: 1 h h




20. Auditrisk is the probabilitythat the auditor willrender anunqualified opinionon financialstatementsthat are
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materially misstated.
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ANS: T h PTS: 1 h h




21. Astronginternalcontrol system willreducethe amountof substantivetestingthat mustbeperformed.
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ANS: T h PTS: 1 h h




22. Substantivetestingtechniquesprovideinformationabout theaccuracyandcompletenessof an h h h h h h h h h h h




application's processes.
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ANS: F h PTS: 1 h h




MULTIPLECHOICE h




1. Theconceptof reasonableassurance suggeststhat
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a. thecost of an internal control should be less thanthebenefit it provides
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b. awell-designedsystem ofinternal controls willdetect allfraudulent activity
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c. theobjectivesachievedbyan internalcontrolsystemvarydependingonthedata
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processing method
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d. theeffectivenessofinternalcontrolsisafunctionoftheindustryenvironment ANS:
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h A PTS: 1 h




2. Whichof thefollowingis nota limitationof theinternal control system?
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a. errors are made due to employeefatigue h h h h h h




b. fraudoccursbecause of collusion between twoemployees h h h h h h h




c. theindustryis inherentlyrisky h h h h




d. managementinstructsthebookkeepertomakefraudulentjournalentries h h h h h h h h




hANS: C h PTS: 1 h




3. Themostcost-effectivetypeof internalcontrolis
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a. preventivecontrol h




b. accountingcontrol h




© 2016 Cengage Learning®. May not be scanned, copied or duplicated or posted to a publicly accessible website, in whole or in part, except for use as permitted in a license
h h h h h h h h h h h h h h h h h h h h h h h h h h h h h h




distributed with a certain product or service or otherwise on a password-protected website or school-approved learning management system for classroom use.
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