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SBL Organisational control and audit
8 ACCA Strategic Professional questions with answers and explanations.
Printable worksheet with answer key
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Which of these is a detective control?
- 1 Segregation of duties
- 2 Password access to the system
- 3 Bank reconciliation
- 4 Authorisation limits for purchases
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Correct answer: Bank reconciliation
Detective controls find errors or problems after they occur. The others aim to prevent them.
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Segregation of duties is mainly designed to:
- 1 Reduce the number of staff
- 2 Reduce the opportunity for error and fraud by one person
- 3 Speed up processing
- 4 Replace supervision
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Correct answer: Reduce the opportunity for error and fraud by one person
Separating authorising, recording and custody means that one person cannot commit and hide an irregularity alone.
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The key difference between internal and external audit is that internal audit:
- 1 Gives an opinion to shareholders on financial statements
- 2 Is independent of the entity by law
- 3 Reports to management or the audit committee and covers more than financial statements
- 4 Is only done by regulators
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Correct answer: Reports to management or the audit committee and covers more than financial statements
External audit gives an opinion to shareholders. Internal audit's scope is set by the entity and includes risk, control and governance.
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An outsourcing of the internal audit function means the company should:
- 1 Treat it as no longer subject to governance
- 2 Stop reporting to the audit committee
- 3 Retain responsibility for the function and monitor the provider
- 4 Use the same firm as external auditor in all cases
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Correct answer: Retain responsibility for the function and monitor the provider
Outsourcing transfers the work, not the responsibility for oversight.
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Which of the following is an advantage of an internal control framework such as COSO?
- 1 It reduces the number of risks
- 2 It gives a structured way to design and assess controls
- 3 It guarantees that no fraud occurs
- 4 It removes the need for audit
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Correct answer: It gives a structured way to design and assess controls
A framework provides components, such as control environment, risk assessment and monitoring, against which controls are designed and evaluated.
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Management override of controls is a particular fraud risk because:
- 1 Senior people are able to bypass controls that apply to others
- 2 Staff have no authority
- 3 It cannot be audited
- 4 Controls always fail
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Correct answer: Senior people are able to bypass controls that apply to others
Management can circumvent controls and so the risk is considered in every audit.
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A fraud triangle consists of:
- 1 Opportunity, pressure and rationalisation
- 2 Detection, deterrence and punishment
- 3 Revenue, expense and profit
- 4 Cost, quality and time
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Correct answer: Opportunity, pressure and rationalisation
The three conditions that often exist where fraud occurs are pressure (incentive), opportunity and rationalisation.
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Which statement about whistleblowing arrangements is correct?
- 1 They replace internal audit
- 2 They apply only to external parties
- 3 They are only needed in small companies
- 4 They give staff a safe channel to report concerns and help to detect problems early
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Correct answer: They give staff a safe channel to report concerns and help to detect problems early
An effective policy protects the person reporting and routes concerns to a senior independent person.