CHAPTER 3 - INTERNAL CONRTOL SYSTEM (DIA 6A)

What is the primary purpose of an Internal Control System (ICS)?

• • A. To ensure accurate financial reporting.

• • B. To manage operational efficiency.

• • C. To increase profit margins.

• • D. To reduce the workload of employees.

Which component of ICS establishes the organization's tone and consciousness about control?

• • A. Control Activities

• • B. Control Environment

• • C. Monitoring Activities

• • D. Information and Communication

Which of the following is a key aspect of Risk Assessment in ICS?

• • A. Conducting regular audits

• • B. Identifying and evaluating risks

• • C. Monitoring control systems

• • D. Ensuring information flow

Which ICS component includes the actions defined through policies and procedures?

• • A. Control Environment

• • A. Control Environment

• • C. Control Activities

• • D. Monitoring Activities

What is the purpose of the Information and Communication component in ICS?

• • A. To prevent unauthorized access to information

• • B. To identify, capture, and communicate relevant information

• • C. To evaluate internal controls

• • D. To manage risk

Which ICS component involves continuous evaluation and modification of the control system?

• • A. Risk Assessment

• • B. Control Environment

• • C. Monitoring Activities

• • D. Control Activities

What is the primary method of ensuring that controls are applied as intended?

• • A. Inquiry

• • B. Observation

• • C. Reperformance

• • D. Inspection

Which method of control evaluation involves reperforming a control procedure?

• • A. Inquiry

• • B. Inspection

• • C. Reperformance

• • D. Observation

What is a design deficiency in an internal control system?

• • A. A control that does not operate as intended.

• • B. A missing or improperly designed control.

• • C. A control performed by unauthorized personnel.

• • D. A control that is not regularly monitored.

Which concept refers to the potential size or scope of a misstatement?

• • A. Likelihood

• • B. Magnitude

• • C. Probability

• • D. Severity