Which of the following would best an applicable internal control weakness and its recommended improvement?Select one:a.WEAKNESS:  Fixed assets are delivered directly to the factory floor.IMPROVEMENT:  All purchases should go through the receiving department; the equipment should be inspected and a receiving report should be preparedb.WEAKNESS:  There is no process for obtaining competitive bids.IMPROVEMENT:  Price bids should be obtained from the three suppliers before a purchase order is issued.c. WEAKNESS:  The supervisor could be creating fictitious employees. The supervisor has too many incompatible duties; he hires workers, approves the time cards, and distributes the paychecks. IMPROVEMENT:  Segregate duties. Personnel should hire employees and a paymaster should distribute paychecks.d.WEAKNESS:  There is no written documentation of the approval for purchase.IMPROVEMENT:  A formal capital investment analysis should be performed for purchases of fixed assets; the analysis should evaluate cost and benefits of the request.

Which of the following would best an applicable internal control weakness and its recommended improvement?Select one:a.WEAKNESS:  The production supervisor notifies the general ledger clerk about the receipt of fixed assets.IMPROVEMENT:  The receiving department should send a copy of the receiving report to the fixed asset department so that fixed asset records can be updated and accountability for the asset established.b.WEAKNESS:  The general ledger clerk is conducting the physical inventory and maintaining the record keeping.IMPROVEMENT:  The general ledger clerk should not be taking the physical inventory count. Also, the physical count should occur more frequently.c.WEAKNESS:  Payroll is funded through the general checking account.IMPROVEMENT:  Paychecks should be written on a separate payroll account.d.WEAKNESS:  Costs to rebuild a machine is charged to manufacturing overhead.IMPROVEMENT:  Costs to rebuild machines should be recorded as an increase to the cost of the asset

Which of the following suggests a weakness in the internal control environment?Select one:a.the firm has an up-to-date organizational chartb.monthly reports comparing actual performance to budget are distributed to managersc.the audit committee meets quarterly with the external auditorsd.performance evaluations are prepared every three years

Internal controls have certain limitations. Identify the alternative that is not one of those limitations.a.Controls are directed at routine and non-routine transactions.b.Management can abuse their responsibility.c.The potential of human error exists.d.The cost of implementing a control could exceed it benefits

Which of the following indicates a strong internal control environment?Select one:a.adverse business conditions exist in the industryb.the internal audit group reports to the audit committee of the board of directorsc.there is no segregation of duties between organization functionsd.there are questions about the integrity of management

Which of the following statements about internal control is correct?Select one:a.Exceptionally strong control allows the auditor to eliminate substantive tests.b.The cost-benefit relationship should be considered in designing internal control.c.Properly maintained internal controls reasonably assure that collusion among employees cannot occur.d.Establishing and maintaining internal control is the internal auditor's responsibility.