8. Which of the following best describes an inherent limitation that should be recognized by an auditorwhen considering the potential effectiveness of an internal control structure?a. Procedures whose effectiveness depends on segregation of duties can be circumvented by collusion.b. The competence and integrity of client personnel provide an environment conducive to control andprovides assurance that effective control will be achieved.C. Procedures designed to assure the execution and recording of transactions in accordance with properauthorizations are effective against fraud perpetrated by managementd. The benefits expected to be derived from effective internal control usually do not exceed the cost ofsuch control.9. When considering the effectiveness of a system of internal accounting control, the auditor shouldrecognize that inherent limitations do exist. Which of the following is an example of an inherentlimitation in a system of internal accounting control?a. The effectiveness of procedures depends on the segregation of employee duties.b. Procedures are designed to assure the execution and recording of transactions in accordance withmanagement's authorizationc. In the performance of most control procedures, there are possibilities of errors arising from mistakesin judgmentd. Procedures for handling large numbers of transactions are processed by electronic data processingequipment10. An effective system of internal controla. Cannot be circunvented by managementb. Can reduce the cost of an external auditprevent collusion among employeesd. Eliminates risks and potential loss to the organization11. The internal control cannot be designed to provide reasonableassurance thata. Transactions are executed in accordance with management's authorizationb. Fraud will be eliminated.c. Access to assets is permitted only in accordance with management's authorizationd. The recorded accountability for assets is compared with the existing assets at-reasonable intervals12. Which of the following statements about internal-control is correct?a. Properly maintained internal control reasonably ensures that collusion among employees cannotoccurb. The establishment and maintenance of internal control are important responsibilities of the internalauditorc. Exceptionally strong internal control is enough for the auditor to eliminate substantive tests on asignificant account balanced. The cost-benefit relationship is a primary criterion that should be considered in designing internalcontrol
