Internal Control Processes in an Organization Require That All Investments

question 330

Multiple Choice

Internal control processes in an organization require that all investments exceeding $20, 000 receive authorization from both the president and treasurer. After conducting a sample of these transactions, an auditor determined that 10 of the 500 investments in the sample had not included both required authorizations. The sample has a five percent acceptable error rate. Based on this sample, which of the following actions should the auditor take?

• A) Confirm all of the investments with the organization's internal finance department.
• B) Contact the organization's investment broker and confirm all investments.
• C) Complete a comprehensive review of the organization's investment activity and compare variations over prior years.
• D) Determine that no further testing of investment authorizations is required.

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Definitions:

Shareholder Meetings

Gatherings of a corporation's shareholders, held to discuss company affairs, make decisions, and vote on corporate governance matters.

Outstanding Shares

The total number of shares of a corporation's stock that are currently owned by all its shareholders, including shares held by institutional investors and restricted shares owned by the company’s officers and insiders.

Cumulative Voting

A method of voting used in corporate elections that allows shareholders to allocate their total votes in any proportion among candidates.

Articles Of Incorporation

A document that contains basic information about a corporation and is filed with the state.