[jeff]

Welcome to the Q2 2015 CPA Exam Study Group for AUD.

World Premier: “Unmodified” (Audit Reports Rap Video) 🙂

Posted by Another71 on Thursday, November 13, 2014

Free NINJA: https://www.another71.com/cpa-exam-study-plan/

Jeff Elliott, CPA (KS) | Another71 | NINJA CPA | NINJA CMA | NINJA CPE

[ladybossxo]

@Ocean That question was from NINJA, and in my Becker textbook this is what it says:

Internal control provides only reasonable (not absolute) assurance regarding the achievement of objectives due to the following inherent limitations of internal control:

1. management override of internal control

2. human error

3. collusion

4. segregation of duties may be difficult to achieve in a smaller entity

CPA Exams Done.

[oceansister]

@ Lady-I got Becker and Ninja, too..would you please let me know what chapter/HNWK it is in ? I ran across several questions that have different answers in different test banks, so I am going straight to AL to get to the bottom of it 🙂

[ladybossxo]

@Ocean what was the explanation in Wiley

CPA Exams Done.

[ladybossxo]

@Ocean It is chapter 3, on page A3-63 (middle of the page).

CPA Exams Done.

[oceansister]

@Lady-thank you 🙂 here is the explanation:

cost of internal control should not exceed the benefits expected to be derived therefrom

[trish_1234]

@ lady that is what I have too. gleim

@ Ocean Its the words in the answer choice. the concept of reasonable assurance in internal control is not controlled by auditor its a function of RMM (entity risk)

so I guess A is implying that Internal control may be ineffective due to mistakes (by the auditor therefore it is wrong) in judgement and personal carelessness.

AUD 69, 92 7/15 Gleim and Ninja test bank
FAR sometime in 10/15 Gleim
BEC not taken
REG not taken

[ladybossxo]

@Ocean: You're welcome 🙂

CPA Exams Done.

[trish_1234]

Which of the following questions would an auditor least likely include on an internal control questionnaire concerning the initiation and execution of equipment transactions?

A. Are prenumbered purchase orders used for equipment and periodically accounted for?

B. Are procedures in place to monitor and properly restrict access to equipment?

C. Are competitive bids solicited for purchases of equipment?

D. Are requests for major repairs approved at a higher level than the department initiating the request?

AUD 69, 92 7/15 Gleim and Ninja test bank
FAR sometime in 10/15 Gleim
BEC not taken
REG not taken

[ladybossxo]

B??

CPA Exams Done.

[oceansister]

b?

[trish_1234]

Answer (B) is correct.

Although access to equipment should be restricted to authorized personnel only, the issue is the initiation and execution of equipment transactions, not custody of the assets.

AUD 69, 92 7/15 Gleim and Ninja test bank
FAR sometime in 10/15 Gleim
BEC not taken
REG not taken

[trish_1234]

Awesome.

AUD 69, 92 7/15 Gleim and Ninja test bank
FAR sometime in 10/15 Gleim
BEC not taken
REG not taken

[trish_1234]

A university does not have a centralized receiving function for departmental purchases of books, supplies, and equipment. Which of the following controls will most effectively prevent payment for goods not received, if performed prior to invoice payment?

A. Vendor invoices should be matched with department purchase orders.

B. Invoices over a specified amount should be approved by the vice president of finance.

C. Vendor invoices should be approved by a departmental supervisor other than the employee ordering the goods.

D. Names and addresses on vendor invoices should be compared to a list of department-authorized vendors.

AUD 69, 92 7/15 Gleim and Ninja test bank
FAR sometime in 10/15 Gleim
BEC not taken
REG not taken

[oceansister]

c ?

[trish_1234]

Answer (C) is correct.

The departmental supervisors are the most likely to be aware of the goods received by their departments. Moreover, separating ordering authority from payment authority will prevent unauthorized purchases.

I got to go for a while

AUD 69, 92 7/15 Gleim and Ninja test bank
FAR sometime in 10/15 Gleim
BEC not taken
REG not taken

[Author]

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