: Auditors must have an understanding of the various terms that relate to their

Question

: Auditors must have an understanding of the various terms that relate to their consideration of the internal control structure of an organization. Required: For each term presented below, select the category that most clearly defines or includes the term. The categories may be selected once, more than once, or not at all. Term Category 1. Accounting information and communication system a. Administrative control 2. Control environment b. Control condition 3. Flow chart c. Component of internal control 4. Operating effectiveness d. Documentation 5. Significant deficiency in internal control design e. Placed in operation 6. Monitoring f. Material weakness 7. Questionnaire g. Test of Control 8. Walk-through h. Reportable Condition 9. Very significant deficiency in internal control design i. Relationship of costs and benefits 10. Reasonable assurance

Explanation / Answer

1. Accounting information system - C. Component of internal control

2. Control environment- C. Component of internal control

3. Flowchart-D. Documentation

4. Controls over operating effectiveness-G. Test of control

5. Less severe than a material weakness-H. Significant deficiency

6. Monitoring-C. Component of internal control

7. Questionnaire - D. Documentation

8. Walk-through- E. Implemented

9. Allows a reasonable possibility of a material misstatement-F. Material weakness

10. Reasonable assurance- I. Relationship of costs and benefits

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