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AICPA CPA-Auditing Exam - Topic 3 Question 86 Discussion

The overall attitude and awareness of those charged with governance (i.e., an entity's board of directors) concerning the importance of internal control usually is reflected in its:
D) Safeguards over access to assets. Explanation Choice 'c' is correct. The control environment reflects the overall attitude, awareness and actions of those charged with governance (i.e., the board of directors, management, owners, and others) concerning the importance of control and its emphasis in the entity. Choice 'a' is incorrect. Computer-based controls are a control activity. The overall attitude and awareness of those charged with governance is not a control activity. Choice 'b' is incorrect. A system of segregation of duties is a control activity. The overall attitude and awareness of those charged with governance is not a control activity. Choice 'd' is incorrect. Safeguards over access to assets is a control activity. The overall attitude and awareness of those charged with governance is not a control activity.
A) Computer-based controls.
B) System of segregation of duties.
C) Control environment.

AICPA CPA-Auditing Exam - Topic 3 Question 86 Discussion

Actual exam question for AICPA's CPA-Auditing exam
Question #: 86
Topic #: 3
[All CPA-Auditing Questions]

The overall attitude and awareness of those charged with governance (i.e., an entity's board of directors) concerning the importance of internal control usually is reflected in its:

Show Suggested Answer Hide Answer
Suggested Answer: D

Choice 'd' is correct. When obtaining an understanding of an entity's internal control in a financial statement audit, an auditor is not obligated to search for significant deficiencies in the operation of internal control.

Choice 'a' is incorrect. In order to determine the nature, timing and extent of tests to be performed, an auditor must determine whether the control activities have been implemented.

Choice 'b' is incorrect. An auditor is required to perform procedures to confirm his/her understanding of the internal control systems' design, and to determine whether relevant controls have been implemented.

Choice 'c' is incorrect. An auditor is required to document his or her understanding of the entity's internal control components, even if he or she intends to use a substantive approach.


by Heike at May 03, 2024, 03:43 AM

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Patria
7 months ago
Wow, I didn't realize the control environment was so influential!
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Latricia
8 months ago
Segregation of duties is crucial too, though.
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Louvenia
8 months ago
Wait, I thought computer-based controls were more important?
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Lamonica
8 months ago
Totally agree, it sets the tone for everything.
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Brittani
8 months ago
Control environment is key for governance!
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Jose
9 months ago
I thought safeguards and segregation of duties were more about specific actions, but I’m a bit confused about how they relate to governance attitudes.
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Antonio
9 months ago
I practiced a similar question where the control environment was highlighted as crucial for internal control effectiveness. I think it’s definitely choice C.
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Shantay
9 months ago
I’m not entirely sure, but I feel like the control environment is more about the culture of governance rather than specific controls.
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Olene
9 months ago
I remember discussing the control environment in class, and how it sets the tone for internal controls. I think that makes sense for this question.
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Matilda
9 months ago
Ah, I see now. The control environment is about the overall attitude and awareness of the board, not the specific control activities. That makes sense - I'll keep that in mind as I work through the question.
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Juan
9 months ago
Hmm, I'm a bit unsure about the differences between control activities and the control environment. I'll need to review my notes to make sure I understand the distinction before attempting this.
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Rhea
9 months ago
This seems like a straightforward question about internal control and the control environment. I'll focus on understanding the key concepts and how they relate to the board of directors' role.
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Alona
9 months ago
The control environment is all about the tone at the top and the board's commitment to internal control. I think I've got a good handle on this, so I'll carefully consider each option and select the best answer.
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Olga
9 months ago
I'm a bit confused by the GROUP BY clauses in some of these queries. I'll need to double-check the SQL syntax to make sure I'm interpreting them correctly.
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Noel
9 months ago
This seems like a tricky one. I better double-check my work to make sure I don't make any silly mistakes on the calculations. Gotta get this right!
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Wei
10 months ago
I'm a bit confused by the different timer options. I'll need to carefully read through the descriptions to make sure I understand the differences between them before selecting an answer.
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Maddie
10 months ago
Okay, let's see here. The problem seems to be with long-lasting FTP connections getting forced to reconnect during a failover event. I'm thinking the solution might have something to do with the FTP profile or connection mirroring.
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Cristen
1 year ago
This question is a real 'board' game, huh? I bet the examiners are having a 'director' of a time coming up with these questions.
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Carissa
1 year ago
Definitely, it sets the tone for the whole organization.
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Leandro
1 year ago
The control environment is really important for internal control.
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Alaine
1 year ago
Yeah, these questions can be tricky sometimes.
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Carey
1 year ago
I see what you did there with the 'board' game joke!
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Hector
1 year ago
I guess the board can't just sit back and hope the control activities take care of themselves. Their attitude and priorities really set the stage.
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Theola
1 year ago
Yes, it's important for the board of directors to emphasize the importance of internal control.
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Nina
1 year ago
I agree. The control environment reflects the overall attitude of those charged with governance.
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Edmond
1 year ago
Ah, so the control environment is like the 'attitude and awareness' of the governing body. Makes sense, that's where it all starts.
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Vanesa
1 year ago
User 2
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Rory
1 year ago
User 1
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Nichelle
1 year ago
I think the answer is C) Control environment.
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Ming
1 year ago
The control environment is the foundation of a strong internal control system. It's the tone set by the board and management that permeates the entire organization.
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