📏CPA EXAM PREP

Internal Control and Service Organizatio

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Question

What is the auditor looking for in a procure-to-pay walkthrough?

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Answer

How one transaction moves through the process and controls.

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Question

Why is a single clerk handling vendor setup, invoice approval, and payment a problem?

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Answer

It violates segregation of duties and creates fraud risk.

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Question

How does the auditor decide whether to test operating effectiveness of a control?

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Answer

Only if the control will be relied on or substantive evidence is insufficient.

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Question

Why are application controls dependent on ITGCs?

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Answer

ITGCs underpin consistent processing of automated controls.

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