Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Corporate Governance > 3. Management, Internal Audit And External Audit > Flashcards

3. Management, Internal Audit And External Audit Flashcards

0
Q

The management framework is in many ways analogous to the — framework

A

COSO

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
1
Q

— is supervised, run and controlled for the board by more junior, individual managers

A

Assurance

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

When explaining how management contributes to corporate governance, what is a good framework to use?

A

The COSO framework

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Who operates the management framework on behalf of the board?

A

Management

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

What is the chief disadvantage of management’s assurances to the board?

A

It is not independent or objective

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

What two governance functions mitigate the subjectivity of management assurance?

A

Internal and external audit

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Name some assurance functions other than management, internal audit and external audit

A 
Audit committee
Quality or planning team
Consultants and hired specialists
Non-executive directors
Specialist units (health and safety)
External reviewers
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

As well as providing assurance, management also contributes to corporate governance by developing — and —

A

Policies and procedures

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

— are management’s written guidance on the principles governing operations

A

Policies

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

List some formal communication methods through which policies may be communicated to the organisation

A 
Documented policy statements
Employee newsletters
Education workshops
Management or team meetings
Intranet
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

A key role of management is seeking to achieve the organisation’s — through their activity and that of their staff

A

Objectives

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

A key role of management is ensuring the e–, e– and e– management of risk

A

Economic, efficient and effective

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

A key role of management is encouraging an appropriate — culture in the organisation

A

Ethical

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

A key role of management is proactive — and — over their activities and functions

A

Monitoring and control

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

A key role of management is the provision of accurate, complete, timely and objective — and — when required

A

Reporting and assurance

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

A key role of management is ensuring they and their staff comply with p— and external — and —

A

Policies

Laws and regulations

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Which is the most obvious occasion at which the board of a private sector organisation reports to its shareholders?

A

Annual General Meeting

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

Through what medium does the board primarily report to shareholders?

A

The Annual Report

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

What are the main sections of an Annual Report?

A

Chairman’s report
Chief Executive Officer’s Report
Financial Statements
External Auditor’s Report

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

External auditors report on financial operations to the —

A

Shareholders

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

Internal auditors report internally to the audit committee on g–, r– m– and c– issues

A

Governance, risk management and control

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

External — authorities may also require specific reporting from the organisation at predetermined intervals

A

Reporting

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

Define internal audit (again!)

A

An independent, objective
Assurance and consulting activity
Designed to add value and improve an organisation’s operations.
It helps an organisation achieve its objectives
By bringing a systematic, disciplined approach
To evaluate and improve
The effectiveness of risk management, control and governance processes

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

Internal audit in most countries is not a statutorily — function

A

Regulated

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

Internal auditors who are members of the IIA are required to comply with what two key documents?

A
  1. International Standards for the Professional Practice of Internal Auditing
  2. Code of Ethics
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Q

The role of internal audit includes providing an i– and o– analysis of the organisation’s activities

A

Independent and objective

26
Q

The role of internal audit includes providing the board, audit committee and senior management with objective — on corporate governance, risk management and control activity

A

Assurance

27
Q

The role of internal audit includes producing r– and r– for improvement for management

A

Reports

Recommendations

28
Q

The role of internal audit includes promoting awareness of r— and c— to help embed corporate governance

A

Risk and control

29
Q

The role of internal audit includes providing c— and advice to managers on risk identification and assessment, mitigation, specific controls and related areas of expertise

A

Consultancy

30
Q

In providing oversight for an internal audit function, audit committees should ensure the function is structured in such a way that achieves organisational —

A

Independence

31
Q

The head of internal audit should report to the — — — and have a direct reporting line into the chair of the — —

A

Chief executive officer

Audit committee

32
Q

The audit committee should review the internal audit function’s — and ensure unrestricted access to —, — and — —

A

Charter

Records, personnel and physical properties

33
Q

The audit committee should review and approve the annual internal audit b—

A

Budget

34
Q

Decisions requiring the hiring or termination of appointment of the head of internal audit should require endorsement by…

A

The chair of the audit committee

35
Q

The chair of the audit committee should be appropriately involved in — — and compensation decisions related to the head of internal audit

A

Performance evaluation

36
Q

The audit committee should regularly provide the head of internal audit and the external audit with the opportunity to — — with the committee without the presence of management

A

Confer privately

37
Q

What is the core purpose of external audit?

A

To undertake an independent review of the financial statements
To ensure they are objective and can be relied upon

38
Q

In the private sector, external auditors will give their opinion on whether the company is a g— c—

A

Going concern

39
Q

External audit is a — — for large and public companies

A

Statutory requirement

40
Q

In the public sector, external audit of Central government is undertaken by…

A

The National Audit Office

41
Q

The primary external auditor of local public services is…

A

The Audit Commission

42
Q

External audit involves consideration and assessment of the c—, r—, a— and p— of the financial records.

A

Completeness
Relevance
Accuracy
Presentation

(CRAP)

43
Q

What are the five key principles that underpin the work of external audit?

A 
Evidence
Due audit care
Fair presentation
Independence 
Ethical conduct
44
Q

Fundamental to the work of external auditors is v—, which implies that another body of examiners, using the same data, would make very similar conclusions and recommendations

A

Verifiability

45
Q

Good practice in corporate governance now considers limits on — — — that external auditors should undertake as appropriate

A

Non-audit work

46
Q

Name the foremost non-audit services that external audit firms should not now provide to their clients (unless not providing external audit services to same client)

A 
Accountancy
Financial
IT
Systems development
Internal audit
47
Q

Why might external auditors be seen as MORE independent than internal auditors

A

External firm

48
Q

Why might external auditors be seen as LESS independent than internal audit?

A

Receive audit fees

49
Q

What are the fundamental similarities between internal and external audit?

A

They both provide assurance
They are both independent
They both have close working relationships with the audit committee
They both work to professional and ethical standards
They are both mandatory in the UK public sector
They both work in a systematic and disciplined way

50
Q

What is the fundamental difference between internal and external audit in terms of their reporting lines?

A

External audit reports to shareholders

Internal audit reports to senior management, usually to the audit committee and/or CEO

51
Q

What is the fundamental difference between internal and external audit in terms of statutory requirements?

A

In the UK private sector, external audit is a statutory requirement for a plc.
This is not the case for internal audit

52
Q

According to the UK Corporate Governance Code, what should a listed company do if it does not have an internal audit function?

A

Review the need for one annually

Explain reasons for not having one in the annual report

53
Q

What is the difference between internal and external auditors with respect to professional qualification?

A

External auditors must be professionally qualified with a recognised professional body
Internal auditors have no such requirement

54
Q

What is the difference between internal and external audit with respect to the focus of audit work?

A

External audit focuses on financial systems and controls

Internal audit covers a wide range of systems and processes

55
Q

What is the difference between internal and external audit with respect to knowledge of the company?

A

Internal audit will tend to develop a better understanding of the organisation than external audit

56
Q

What are the three main approaches to locating internal audit functions?

A

In-house
Outsourced
Shared service

57
Q

In-house internal audit functions are resourced by — — of the organisation

A

Permanent employees

58
Q

What are the chief benefits of in-house internal audit arrangements?

A 
Cost effective
Experience of the organisation
Development opportunity for future senior managers
Confidentiality
Conflicts of interest less likely
Consistency over time
59
Q

What are the three generally accepted styles of outsourcing internal audit?

A

Supplementation
Co-sourcing or partnering
Total outsourcing

60
Q

Methods of outsourcing internal audit include “supplementation”. How does this work?

A

Outside help is brought in to assist internal audit with specific tasks, e.g. IT audit specialists

61
Q

Methods of outsourcing internal audit include “co-sourcing” or “partnering”. How does this work?

A

Consultants brought in on day-to-day basis, but usually report to an in-house chief audit executive.
Regular and formalised as opposed to supplementation.

62
Q

Methods of outsourcing internal audit include “total outsourcing”. How does this work?

A

Entire internal audit operation is undertaken by external consultants.

Corporate Governance (11 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions