Tag: Topic 17

An audit committee is a committee with responsibility for audit-related matters.

Which ONE of the following could be members of an effective audit committee?

Select ONE answer:

1. Executive directors only
2. Non-executive directors and internal auditors
3. Non-executive directors only
4. Non-executive directors and external auditors

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 3

1. Not correct
2. Not correct
3. Correct => An audit committee is made up of non-executive directors only
4. Not correct

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An effective system of internal control requires segregation of basic functions.

Which ONE of the following functions does not ideally need to be segregated?

Select ONE answer:

1. Authorisation of transactions
2. Budgetary control
3. Custody or handling of assets
4. Recording of transactions

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 2

1. Not correct
2. Correct => Authorisation of transactions, custody or handling of assets and recording of transactions are the three functions which should ideally be separated such that no-one person can initiate the transaction, record that transaction in the accounting records and have custody of assets which arise from that transaction. For fraud to take place, with such segregation of duties, there would have to be significant collusion. Budgetary Control is a function which follows from the recording of transactions can only take place once there is confidence on the integrity of data coming from effective internal control systems.
3. Not correct
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.

An effective system of internal control requires segregation of basic functions.

Which ONE of the following functions does not ideally need to be segregated?

Select ONE answer:

1. Preparation of financial statements
2. Authorisation of transactions
3. Custody or handling of assets
4. Recording of transactions

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 1

1. Correct => Authorisation of transactions, custody or handling of assets and recording of transactions are the three functions which should ideally be separated such that no one person can initiate the transaction, record that transaction in the accounting records and have custody of assets which arise from that transaction. For fraud to take place, with such segregation of duties, there would have to be significant collusion. Preparing financial statements is a function which follows from the recording of transactions can only take place once there is confidence on the integrity of data coming from effective internal control systems.
2. Not correct
3. Not correct
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.

Which ONE of the following is a reason why organisations need to have an effective system of control?

To help the organisation in …..

Select ONE answer:

1. maximising its profitability
2. managing its assets and liabilities
3. cutting down the time needed for the audit
4. complying with laws and regulations

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 4

1. Not correct
2. Not correct
3. Not correct
4. Correct => Complying with laws and regulations is a primary reason why organisations need an effective system of control. The other options may result from that effective internal control system.

This work is licensed under a Creative Commons Attribution 4.0 International License.

Which ONE of the following is a reason why organisations need to have an effective system of control?

To help the organisation in …..

Select ONE answer:

1. maximising its profitability
2. managing its assets and liabilities
3. minimising business risks
4. cutting down the time needed for the audit

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 3

1. Not correct
2. Not correct
3. Correct => Minimising business risks is a primary reason why organisations need an effective system of control. The other options may result from that effective internal control system.
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.