Internal Control MCQs



NOTE: Attempt all Questions to see the Result at the bottom of this page.


  1. 1)

    Tests of control are not concerned with_Tests of control are not concerned with_


    • A) Existence of controls
    • B) Effectiveness of controls
    • C) Continuity of controls
    • D) Designing of controls

  2. 2)

    The sequence of steps in the auditor’s consideration of internal control is as follows –


    • A) Obtain an understanding, design substantive test, perform tests of control, make a preliminary assessment of control risk
    • B) Design substantive tests, obtain an understanding, perform tests of control, make a preliminary assessment of control risk
    • C) Obtain an understanding, make a preliminary assessment of control risk, perform tests of control, design substantive procedures
    • D) Perform tests of control, obtain and understanding, make a preliminary assessment of control risk, design

  3. 3)

    Which of the following is not an inherent limitation of internal control system?


    • A) Management override
    • B) Collusion among employees
    • C) Inefficiency of internal auditor
    • D) Abuse of authority

  4. 4)

    An auditor should study and evaluate internal controls to


    • A) determine whether assets are safeguarded
    • B) determine whether assets are safeguarded
    • C) Plan audit procedures
    • D) express and opinion

  5. 5)

    XYZ Ltd. Conducts quarterly review of operations. It discovers that unrest in a south east Asian country may affect the supply of raw materials to it the next quarter. This is an example of :


    • A) risk assessment
    • B) control procedure
    • C) supervision
    • D) control environment

  6. 6)

    The primary purpose of performing tests of control is to provide reasonable assurance that_


    • A) there are no material misstatements due to fraud or error in financial statement
    • B) accounting system is well documented
    • C) Written evidence is there to support transactions
    • D) if internal control is effective

  7. 7)

    If the auditor assesses control risk as high….


    • A) Document the conclusions
    • B) documents the reasons along with conclusions
    • C) perform tests of control
    • D) perform walk through tests

  8. 8)

    The overall attitude and awareness of an entity’s board of directors concerning the importance of internal control is reflected in


    • A) accounting controls
    • B) control environment
    • C) control procedures
    • D) supervision

  9. 9)

    Which of the following are included in test of control?


    • A) Reperformance and observation
    • B) Inquiry and analytical procedures
    • C) Comparison and conformation
    • D) Inspection and verification

  10. 10)

    Control risk is assessed at


    • A) Overall financial statements level
    • B) Fraud risk factor level
    • C) Financial statement assertion level
    • D) Control environment level