CPFO GOVERNMENTAL ACCOUNTING, AUDITING
AND FINANCIAL REPORTING PRACTICE TEST
QUESTIONS AND ANSWERS
the person who is ultimately responsible for internal rules.
A. The management B. The board of directors
C. The outside auditor
ANSWER B. The ruling board is the correct answer. The governing body is
eventually in charge of making sure that management meets its duties when it
comes to internal control, even though management is primarily responsible for
it. P. 734–735
Which of the following types of theft is least likely to happen in a place where
keeping track of cash and accounts receivable is properly separated?
2. Stealing 3. Lying 4. Making false claims
D. Fraudulent charge-offs — ANSWER A. Lapping.
How should I choose a group to test the internal controls?
Samples taken in blocks, from inside the company, or at random
The answer is C. Random Sampling, not D. Blind Sampling.
All of these things have inherent risks, except for
A. Size B. Difficulty C. Money coming in
D. Past issues — ANSWER A. Size. Five situations are usually thought of as
having an underlying risk.
1. How hard it is
2. Payments in cash
3. Direct payments to people who are not the beneficiary
4. A history of past issues
5. A history of not responding to the same control problems in the past
P.740
What does this not show as an example of a control procedure?
A. Permission B. Separation of tasks that don't go together
C. Review of the data D. Required vacation days – ANSWER D. Required
vacation days. There are 7 types of laws that deal with control.
, 1. Steps to take to make sure transactions are allowed correctly
2. Control over keeping funds and records safe
3. Separation of tasks that don't go together
4. Regular checks and balances
5. Checks every so often
6. An analysis of financial data to see if it makes sense
7. Records that are properly made
In a full set of internal rules, which of the following is the most important part?
Monitoring (A), Risk assessment (B), Communication (C), and the control
setting (D) are the types of things that need to be done. It needs to create a good
setting for control. 7.36.
Which of the following is not a statement that is made directly in financial
reporting?
A. Being or happening
B. Being complete C. Having rights and duties
D. All of the above — ANSWER D. All of the above.
In order to meet the implicit claim of completeness, which of the following
control-related steps is the most useful?
A. Prior permission and approval B. Separation of tasks that don't go together
C. Methods for analysis
D. Checking the time period—ANSWER C. Analytical steps. The only really
good way to tell if numbers in financial records are "telling the whole story" is
to do an analytical review.
What is one of the problems that internal rules can't fix?
A. The cost-benefit rule
B. Bribery
C. Override by management
D. All of the above — ANSWER D. All of the above. Because of the costs and
benefits, there will always be a certain amount of danger. The second problem
with internal control is that management can sometimes get around it. The risk
of cooperation is a third problem that comes with internal control. 7.35–737
Which of these is the most important thing that leads to fraud?
One: reason; two: attitude; three: chance
AND FINANCIAL REPORTING PRACTICE TEST
QUESTIONS AND ANSWERS
the person who is ultimately responsible for internal rules.
A. The management B. The board of directors
C. The outside auditor
ANSWER B. The ruling board is the correct answer. The governing body is
eventually in charge of making sure that management meets its duties when it
comes to internal control, even though management is primarily responsible for
it. P. 734–735
Which of the following types of theft is least likely to happen in a place where
keeping track of cash and accounts receivable is properly separated?
2. Stealing 3. Lying 4. Making false claims
D. Fraudulent charge-offs — ANSWER A. Lapping.
How should I choose a group to test the internal controls?
Samples taken in blocks, from inside the company, or at random
The answer is C. Random Sampling, not D. Blind Sampling.
All of these things have inherent risks, except for
A. Size B. Difficulty C. Money coming in
D. Past issues — ANSWER A. Size. Five situations are usually thought of as
having an underlying risk.
1. How hard it is
2. Payments in cash
3. Direct payments to people who are not the beneficiary
4. A history of past issues
5. A history of not responding to the same control problems in the past
P.740
What does this not show as an example of a control procedure?
A. Permission B. Separation of tasks that don't go together
C. Review of the data D. Required vacation days – ANSWER D. Required
vacation days. There are 7 types of laws that deal with control.
, 1. Steps to take to make sure transactions are allowed correctly
2. Control over keeping funds and records safe
3. Separation of tasks that don't go together
4. Regular checks and balances
5. Checks every so often
6. An analysis of financial data to see if it makes sense
7. Records that are properly made
In a full set of internal rules, which of the following is the most important part?
Monitoring (A), Risk assessment (B), Communication (C), and the control
setting (D) are the types of things that need to be done. It needs to create a good
setting for control. 7.36.
Which of the following is not a statement that is made directly in financial
reporting?
A. Being or happening
B. Being complete C. Having rights and duties
D. All of the above — ANSWER D. All of the above.
In order to meet the implicit claim of completeness, which of the following
control-related steps is the most useful?
A. Prior permission and approval B. Separation of tasks that don't go together
C. Methods for analysis
D. Checking the time period—ANSWER C. Analytical steps. The only really
good way to tell if numbers in financial records are "telling the whole story" is
to do an analytical review.
What is one of the problems that internal rules can't fix?
A. The cost-benefit rule
B. Bribery
C. Override by management
D. All of the above — ANSWER D. All of the above. Because of the costs and
benefits, there will always be a certain amount of danger. The second problem
with internal control is that management can sometimes get around it. The risk
of cooperation is a third problem that comes with internal control. 7.35–737
Which of these is the most important thing that leads to fraud?
One: reason; two: attitude; three: chance
