Question

Q No.9: Auditors must have an understanding of the various terms that relate to their consideration of the internal control structure of an organization.

Required: For each term presented below, select the category that most clearly defines or includes the term. The categories may be selected once, more than once, or not at all.

                                  Term                                                                                Category

1.            Accounting information and communication system    a. Administrative control

2.            Control environment                                                              b. Control condition

3.            Flow chart                                                                                 c. Component of internal control

4.            Operating effectiveness                                                        d. Documentation

5.            Significant deficiency in internal control design              e. Placed in operation

6.            Monitoring                                                                                f. Material weakness  

7.            Questionnaire                                                                          g. Test of Control

8.            Walk-through                                                                           h. Reportable Condition

9.            Very significant deficiency in internal control design    i. Relationship of costs and benefits

10.         Reasonable assurance

Answer 1

We can match categories with terms to define them as below.

1	Accounting information and Control System	d	Documentation
2	Control Environment	b	Control condition
3	Flow Chart	c	Component of internal Control
4	Operating Effectiveness	i	Relationship of costs and benefits
5	Significatnt deficiency in internal control design	f	Material weakness
6	Monitoring	a	Administrative control
7	Questionnaire	g	Test of Control
8	Walk-through	h	Reportable Condition
9	Very significant deficiency in internal control design	f	Material weakness
10	Reasonable assurance	e	Placed in operation

Accounting information system is built for documentation and design, control environment are conditions under which audit function operates, flow chart shows all the conponent and process, operating effectiveness can be measure by cost and benefits, significant deficiency and very significant deficiency both indent towards any material weakness in system, monitering is the function of adminitration, Questionnaire is a audit tool to test the control the procedures in system, walk through are reportable conditions and reasonable assurance can be obtain by establishing that control measures are placed in operations.