Identify to indicate whether each procedure is a preventive or detective control
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Below are several statements about internal controls. Show Required:  Q: When considering the effectiveness of internal control, the auditor should recognize that inherent… A: SOLUTION- AN INHERENT LIMITATION OF ANY CLIENT'S INTERNAL CONTROL IS THAT CONTROLS CAN BE… Q: Which of the following is true with respect to fraud risk factors in an IT environment?a. Employees… A: Fraud: It can be defined as the deception on criminal grounds, committed by the person… Q: Cue Manufacturing Ltd is setting up its internal control system. As part of this process, the CEO… A: For prevention of fraud, theft, and manipulation of records, control over the internal procedure… Q: A code of ethics is an important element of a fraud prevention program. Which of the following would… A: Fraud: Fraud is the act of deliberately conducting false reporting of facts, to acquire funds or… Q: Marsha Mason, CPA, believes that it is appropriate to obtain an understanding of internal control… A: Understanding of internal controls is a preliminary step in planning the audit as it will help the… Q: Management can expect various benefits to follow from implementing a system of strong internal… A: Click to see the answer Q: In reviewing the process procedures and internal controls of one of your audit clients, Steeplechase… A: Internal controls means the control related to internal functions of the system and its procedures. Q: In reviewing the process procedures and internal controls of one of your audit clients, Steeplechase… A: Internal controls means the control related to internal functions of the system and its procedures. Q: In reviewing the processes, procedures, and internal controls of one of your audit clients, Veronica… A: Click to see the answer Q: When comparing the auditor's responsibility for detecting employee fraud and for detecting errors,… A: Employee errors means mistakes happened in preparation of financial statements by the employee and… Q: When comparing the auditor's responsibility for detecting employee fraud and for detecting errors,… A: Auditing is considered as a process carried over by a business in order to check the accuracy and… Q: 1B. Match the items with the related statements that follow. . Control environment -. Risk… A: Control environment refers to the environment created for the personnels of the organisation in… Q: . Anna Santos audited the information system of Flores Corporation. Upon her evidence collection,… A: The different techniques of gathering audit evidence are by: Observation Examination Interview Q: A good fraud prevention program should address employees’ motivation to steal from the company. The… A: Fraud:- It is an offensive crime that intentionally employees do and manipulate the company… Q: You are an audit supervisor assigned to a new client which is listed on a Stock Exchange. You… A: Audit:- An audit is considered as the physical examination of books of accounts of a company through… Q: Richard Palm is the accounting clerk of Olive Limited. He uses the source documents such as purchase… A: Definition: Financial Reporting System: The financial reporting system (FRS) overview of the… Q: Richard Palm is the accounting clerk of Olive Limited. He uses the source documents such as purchase… A: Financial Reporting System: The financial reporting system (FRS) overview the financial resources of… Q: Richard Palm is the accounting clerk of Olive Limited. He uses the source documents such as purchase… A: Internal control: Internal control is an internal and independent assurance of objectives of an… Q: Internal control is said to be the backbone of all businesses. Which of the following is the… A: Every business organisation has its own objectives and goals. Business wants to achieve that goals… Q: When a fraud has occurred within an organization, management must decide what follow-up action (s)… A: Fraud: Fraud is defined as a deliberate and dishonest activity carried out by an individual or… Q: When a fraud has occurred within an organization, management must decide what follow-up action (s)… A: An organization usually does not take any legal action against the person who has done fraud as it… Q: You are an independent auditor attending an engagement interview with the client. The client’s… A: Data Warehouse: Data warehouse refers to a database which helps in making business decisions. The… Q: You are an audit supervisor assigned to a new client which is listed on a Stock Exchange. You… A: Audit:- An audit is considered as the physical examination of books of accounts of a company by an… Q: For each possible error and fraud numbered a through o, select one internal control from the… A: Internal control procedure: Internal control procedure helps and enables the management to apply… Q: A company implements internal controls to improve the chances that employee will function according… A: SOLUTION- Internal controls are the mechanisms, rules, and procedures implemented by a company to… Q: You are currently working in a mid-tier accounting firm. In an engagement meeting with a client, the… A: Data warehouse: It refers to the database which helps in making business decisions. The process of… Q: You are an audit supervisor assigned to a new client which is listed on a Stock Exchange. You… A: After a careful review of the budget for data security enhancement projects, you feel the budget… Q: The Sarbanes-Oxley Act (SOX) requires that an auditor must O issue an internal control report… A: The Sarbanes Oxley Act requires all the financial reports so that it can include the Internal… Q: a) Internal controls play an important role in reducing the risks of fraudulent activities in any… A: The internal control system includes administrative control and accounting control of cash. Cash… Q: Which of the following is an example of detective controls? a. The company should establish formal… A: Definition: Control activities: Control activities help the management to have a proper control over… Q: Johnson, CPA, has been engaged to audit the financial statements of Rose, Inc., a publicly held… A: The control environment describes how the company must operate its internal control system. Q: As the CFO of the organization, you are currently working at, you have been charged with creating… A: Internal control is an important part of every organization. It helps in maintaining the efficiency… Q: Imagine that you have been hired to audit the sales and collections of a medium-to-large… A: In a medium to large merchandising company there would chances of theft, frauds if effective… Q: COSO lists five components of internal control: control environment, risk assessment, control… A: COSO: It is framework that defines the internal control of an organization as an entity formed by… Q: Refer to the given system flowchart, and we have discussed the control weakness and the risk… A: Frauds in sales department are as follows: Recording fake invoices Misrepresenting the excessive or… Q: Procedures that can be used in obtaining a sufficient understanding of Internal Control include the… A: Auditing is a process in which an auditor checks the financial statements of the company whether the… Q: Select the appropriate control activities for each of the following definitions. Definitions Control… A: a. Physical control Q: What internal control or procedure(s) would provide protection against the following threats? A… A: The internal cost system indicates the internal operating activities and functions followed by the… Q: What internal control or procedure(s) would provide protection against the following threats? A… A: Click to see the answer Q: You are an audit supervisor assigned to a new client which is listed on a Stock Exchange. You… A: An audit is a process of checking and verifying the books of account and financial information of… Q: Question 18 According to the PCAOB, during the audit of internal controls for an issuer (public… A: Introduction: An impartial service that evaluates an organization's internal controls, corporate… What is the difference between a preventive control and a detective control?Preventive controls are proactive in that they attempt to deter or prevent undesirable events from occurring. Detective controls provide evidence that an error or irregularity has occurred.
What is an example of a detective control?Account reviews and reconciliations, observations of payroll distribution, periodic physical inventory counts, passwords, transaction edits and internal auditors are all examples of detective controls.
Which item is considered a detective control?Some examples of detective controls are internal audits, reconciliations, financial reporting, financial statements, and physical inventories.
Is monitoring a preventive or detective control?Detective controls, or monitoring after the fact, can take some of the burden off of the preventative controls, and allows businesses to catch some of the non-compliant spending that can fall through the cracks.
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