[Anonymous]

The Gotham Corporation regularly produces budget vs. actual data for its managers. The company is particularly sensitive to personnel costs, and division variances of greater than five percent for any period are promptly investigated to determine if budgeted postions have not been filled or if there has been extraordinary overtime. Timely exception resolution of this character illustrates the information and communication principles typically associated with:

a.

Internal Communication.

b.

Financial Reporting Information.

c.

Internal Control Information.

d.

External Communication.

Explanation

Choice “c” is correct. Internal control information is needed to facilitate the function of control components and is identified, captured, used and distributed in a timely manner that enables personnel to fulfill their responsibilities. Reporting that triggers prompt exception resolution, root cause analysis, and control updates illustrates this principle.

Choice “b” is incorrect. Financial reporting information principles anticipate that information is identified, captured, used at all levels of the company and distributed in a manner that supports the achievement of financial reporting objectives. Variance analysis supports control more so than effective financial reporting.

Choice “a” is incorrect. Internal communications anticipate that communications enable and support understanding and execution of internal control objectives, processes, and individual responsibilities. Variance analysis specifically supports internal control, not simply internal communications generally.

Choice “d” is incorrect. External communications anticipate that matters affecting the achievement of financial reporting are communicated with outside parties.

I don’t understand this question at all, if any one could help. Thanks!

[Iron_Victory]

Basically it is saying that management its always checking its numbers vs budgets. If there is anything out of the ordinary they check into it to see what is causing the issue and resolve it timely.

This would constitute an internal control as we are checking our selves against anticipated results.

AUD - (74),78
BEC - 85
FAR - 86
REG - 84

[Iron_Victory]

Basically it is saying that management its always checking its numbers vs budgets. If there is anything out of the ordinary they check into it to see what is causing the issue and resolve it timely.

This would constitute an internal control as we are checking our selves against anticipated results.

AUD - (74),78
BEC - 85
FAR - 86
REG - 84

[Anonymous]

got it ! thanks

[Anonymous]

got it ! thanks

[Anonymous]

Dollar Bus Company has set an objective to fully comply with published bus schedules to ensure consistent on-time service. The company knows that shorter routes per bus minimize delays caused by unforeseen issues. Shorter routes require a greater investment in the fleet. The company currently achieves an 83% compliance rate with the schedule and does not expect a significant increase or decrease in ridership or revenue as compliance improves to 100% but does see revenues fall off significantly when buses are late more that 20% of time. The company's objective setting would logically develop as follows:

a.

Compliance with the bus schedule would be reviewed in relation to the risk of lost ridership within tolerable compliance percentages above 80%.

b.

Compliance rates of 80% would become the objective and additional investments in buses would be required to reduce risk.

c.

Additional busses would be acquired to achieve the objective and incentives would be provided to drivers who consistently meet requirements.

d.

Tolerable levels of variation from compliance with stated bus schedules are established as a means of establishing realistic compliance objectives.

Explanation

Choice “a” is correct. Objectives are aligned with risk appetite, which drives risk tolerance levels.

Choice “c” is incorrect. Acquisition of additional busses is a response to risks and would not be part of objective setting. Objective setting precedes risk assessments which precede risk responses.

Choice “d” is incorrect. Tolerable limits would not be used to back into objectives.

Choice “b” is incorrect. Risk responses (purchase of buses) would not be derived from objectives.

Need help with this one now. Anybody?

[Anonymous]

Dollar Bus Company has set an objective to fully comply with published bus schedules to ensure consistent on-time service. The company knows that shorter routes per bus minimize delays caused by unforeseen issues. Shorter routes require a greater investment in the fleet. The company currently achieves an 83% compliance rate with the schedule and does not expect a significant increase or decrease in ridership or revenue as compliance improves to 100% but does see revenues fall off significantly when buses are late more that 20% of time. The company's objective setting would logically develop as follows:

a.

Compliance with the bus schedule would be reviewed in relation to the risk of lost ridership within tolerable compliance percentages above 80%.

b.

Compliance rates of 80% would become the objective and additional investments in buses would be required to reduce risk.

c.

Additional busses would be acquired to achieve the objective and incentives would be provided to drivers who consistently meet requirements.

d.

Tolerable levels of variation from compliance with stated bus schedules are established as a means of establishing realistic compliance objectives.

Explanation

Choice “a” is correct. Objectives are aligned with risk appetite, which drives risk tolerance levels.

Choice “c” is incorrect. Acquisition of additional busses is a response to risks and would not be part of objective setting. Objective setting precedes risk assessments which precede risk responses.

Choice “d” is incorrect. Tolerable limits would not be used to back into objectives.

Choice “b” is incorrect. Risk responses (purchase of buses) would not be derived from objectives.

Need help with this one now. Anybody?

[Author]

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