Internal Control MCQs 2026

Internal control is best described as

1. A only external audit procedures ✓
2. B only product advertising ✓
3. C only union negotiations ✓
4. D process designed to provide reasonable assurance regarding objectives ✓

Which statement about Segregation of duties is correct

1. A one person handles all cash and records ✓
2. B separating authorization recording and custody functions ✓
3. C CEO signs all cheques and posts entries alone ✓
4. D warehouse and ledger same person always ✓

Physical controls is best described as

1. A safeguarding assets through locks access and counts ✓
2. B open unrestricted warehouse ✓
3. C no access logs ✓
4. D unlimited petty cash without limits ✓

In Internal Control, Authorization controls primarily means

1. A management approval before transactions are executed ✓
2. B any employee signs contracts ✓
3. C no approval for payments ✓
4. D automatic unlimited spending ✓

Internal Control: IT general controls can be defined as

1. A shared passwords for all users ✓
2. B controls over access change management and operations in IT ✓
3. C no backup procedures ✓
4. D unrestricted program changes in production ✓

Regarding Application controls in Internal Control, the accurate view is

1. A automated or manual controls within business applications ✓
2. B only building maintenance ✓
3. C only fleet fuel logs ✓
4. D only canteen inventory ✓

A key aspect of Control environment is that it involves

1. A only physical security locks ✓
2. B only backup tapes ✓
3. C only invoice numbering ✓
4. D tone at top including integrity and ethical values ✓

Regarding Control activities in Internal Control, the accurate view is

1. A policies and procedures ensuring management directives are carried out ✓
2. B mission statement only ✓
3. C logo design guidelines ✓
4. D office colour scheme ✓

Internal Control: Reconciliation controls can be defined as

1. A never compare bank to books ✓
2. B ignore differences permanently ✓
3. C comparing records to identify and correct differences ✓
4. D only annual reconciliation of petty cash ✓

Detective controls is best described as

1. A block transaction before entry ✓
2. B prevent duplicate invoice before payment ✓
3. C designed to identify errors or fraud after occurrence ✓
4. D stop unauthorized access at login only always ✓

In Internal Control, Compensating controls primarily means

1. A eliminate all controls in small entities ✓
2. B ignore control gaps ✓
3. C duplicate same weakness ✓
4. D alternative controls when primary segregation not feasible ✓

A key aspect of Control deficiency is that it involves

1. A effective control always ✓
2. B design or operation that does not allow prevention or detection timely ✓
3. C immaterial typo in memo ✓
4. D strong control environment only ✓

Internal Control: Significant deficiency can be defined as

1. A trivial formatting issue ✓
2. B important enough to merit attention of those charged with governance ✓
3. C corrected before year-end always immaterial ✓
4. D no impact possible ✓

Walkthrough test in the context of Internal Control refers to

1. A only reading policy manual without testing ✓
2. B only analytical review at year-end ✓
3. C tracing transaction through system to understand control design ✓
4. D only inquiry without tracing ✓

Which statement about Tests of operating effectiveness is correct

1. A only design assessment without operation ✓
2. B procedures verifying controls operated throughout period ✓
3. C only one transaction always sufficient for all ✓
4. D ignore deviations ✓

Monitoring activities is best described as

1. A never review controls ✓
2. B only external marketing survey ✓
3. C ignore deficiencies ✓
4. D ongoing and separate evaluations of control effectiveness ✓

Preventive controls is best described as

1. A detect after loss only ✓
2. B designed to prevent errors or fraud before occurrence ✓
3. C investigate after year-end only ✓
4. D correct after audit report ✓

Material weakness in the context of Internal Control refers to

1. A minor delay in filing stationery requisition ✓
2. B cosmetic report formatting ✓
3. C deficiency or combination such that material misstatement may not be prevented or detected ✓
4. D optional training delay ✓

Risk assessment component in the context of Internal Control refers to

1. A entity identification and analysis of risks to achievement of objectives ✓
2. B ignoring all business risks ✓
3. C only counting inventory ✓
4. D only payroll calculation ✓

Information and communication is best described as

1. A only social media posts ✓
2. B system capturing and communicating financial reporting information ✓
3. C only cafeteria feedback ✓
4. D only sports news ✓