The purpose of separating the duties of hiring personnel and distributing payroll checks is to separate the
a. administrative controls from the internal accounting controls
b. authorisation of transactions from the custody of related assets
c. human resources function from the controllership function
d. operational responsibility fro, the record-keeping responsibility
Answer: b. authorisation of transactions from the custody of related assets
Tests of controls in a GAAS audit are required for
a. obtaining evidence about the financial statement assertions
b. obtaining evidence about the operating effectiveness of client control activities
c. accomplishing control over the occurrence of recorded transactions
d. applying analytical procedures to financial statement balances
Answer: b. obtaining evidence about the operating effectiveness of client control activities
A transaction-level internal control activity is best described as
a. a method for recording, summarising, and reporting financial information
b. an action taken by auditors to obtain evidence
c. the functioning of the board of directors in support of its audit committee
d. an action taken by client personnel for the purpose of preventing, detecting, and correcting errors and frauds in transactions to eliminate or mitigate risks identified by the company
Answer: d. an action taken by client personnel for the purpose of preventing, detecting, and correcting errors and frauds in transactions to eliminate or mitigate risks identified by the company
