Appendix 7: Answers to Reinforcement Quizzes
Answers to Reinforcement Quiz ñ Section III, Chapter 3
1. What step is not required in evaluating the internal control process?
a.
segment the agency
b. train the evaluation staff
c.
audit each of the segments
d. document the process
Answer: (c). It is not necessary to audit each segment. Indeed, the
time involved would be so great that we would probably never complete
the evaluation of internal controls.
2.
An assessable unit could be:
a.
a government agency.
b. a very large governmental division.
c.
a property on the county's tax rolls.
d. a governmental unit large enough to be significant, but small enough
that an internal review team can deal with it as a whole.
Answer: (d). In conducting an internal control review, one technique is
to segment the agency into components, programs and administrative
functions in order to develop an inventory of assessable units. The units
must be large enough to make the work on them worthwhile, but not so
large that the team members cannot deal with the whole unit.
3. Following up on corrective actions identified after an internal control review:
a.
is not necessary, although many agencies do it.
b. is one of the steps in the internal review process.
c.
is a function that is properly performed by auditors, not managers.
d. creates a conflict of interest for managers conducting the next
internal control review.
Answer: (b). Even after conducting a thorough internal control review
and establishing corrective actions, we may find that the recommended
corrective action may not always have the desired impact on the
assessable unit. A detailed follow-up process is integral to an effective
internal control process.
4.
Which item is false regarding the steps an agency should take on internal
control deficiencies?
a.
design proposed corrective actions
b.
establish timetables for corrective actions, including assigning the
responsible individual
c.
place all responsibility for the assessment and maintenance of
internal controls under the agency CFO
d. track progress to ensure timely and effective results
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AGA Study Guide 3, 2016 Edition

Appendix 7: Answers to Reinforcement Quizzes
e. establish follow-up procedures
Answer: (c). Although the CFO is very involved with internal controls,
he or she cannot be solely responsible for them. Many internal controls
relate to financial activities, of course, but others will relate to
programmatic or non-financial activities. For example, in many social
service programs, the organization must determine beneficiary
eligibility. Programmatic managers need to be involved in such
controls.
5. The graph on page III-59 shows two lines coming from Box 3, ìConduct
Risk Assessments.î One line goes to Box 6, ìDevelop Control Plans.î The
other goes to ìCorrective Action.î Under what circumstances would you go
from Conduct Risk Assessments directly to Corrective Action?
Answer: Sometimes the risk assessment clearly demonstrates that the
current procedures are so poor that immediate action is needed. For
example, if we were reviewing a hospital and found that controlled
drugs were left in a supply cabinet, we would want to correct that
problem immediately.
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AGA CGFM Study Guide 3: Governmental Financial Management and Control