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Internal Audit Practice > Audit Engagement Planning > Flashcards

Audit Engagement Planning Flashcards

1
Q

On what 4 things do minutes of board and committee meetings provide info?

A
  1. New developments
  2. Staff changes
  3. Diversification into new markets or products
  4. Major initiatives such as cost reduction programs
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2
Q

With respect to gathering information from the audit committee, what is the CAE’s responsibility?

A

To have regular meetings with chairman of audit committee

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3
Q

What are the 7 sources of external reports?

A
  1. External audit
  2. Specialists (e.g. I.T. consultants)
  3. Engineers
  4. H&S inspectors
  5. Insurance assessors
  6. Actuaries
  7. Occupational health practitioners
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4
Q

What information can be gathered from external reports?

A
  1. May indicate hi-level risks
  2. Evidence of fraud
  3. May warn of potentially serious situation
  4. May provide assurance
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5
Q

What information can be gathered from the organisation’s intranet?

A
  1. Policy information
  2. Structure charts
  3. Procedures
  4. Standards
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6
Q

What information can be gathered from the Internet when planning an audit engagement?

A

Key risks facing similar organisations

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7
Q

When gathering information, what should the organisation’s risk policy confirm?

A
  1. Management ethos

2. Policy for risk management

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8
Q

What is the purpose of policy documents?

A

To lay down a framework in which the organisation will achieve its objectives

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9
Q

How do policy documents help IA when gathering information?

A

They help IA to identify key processes

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10
Q

With respect to policy and procedure documents, for what does IA have authority?

A

To recommend and influence changes to policies and procedures

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11
Q

What information can be taken from the business plan?

A
  1. Most recent assessment of business area
  2. Strategy for next 12 months
  3. Forecast for next three to five years
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12
Q

Analytical reviews provide measures of d… and t… when compared to related facts

A

Deviation and trend

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13
Q

What are the two main questions asked in analytical review?

A
  1. Is variance within tolerance?

2. Are trends consistent with one another?

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14
Q

When due to conduct a fact-finding interview, it is important to undertake b… p…

A

Background preparation

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15
Q

When conducting a fact-finding interview, it is important never to enter the interview c…

A

Cold

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16
Q

When conducting a fact-finding interviewing, you should prepare a c… of areas to cover

A

Checklist

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17
Q

When preparing for a fact finding interview, you should list the t… of q… you will use

A

Types of questions

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18
Q

The two types of fact finding questions are…?

A

Open and closed

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19
Q

When conducting a fact finding interview, it is crucial to define the o… of the meeting

A

Objectives

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20
Q

During or after a fact finding interview, you should encourage the manager to what?

A

Walk through the processes and introduce you to key staff

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21
Q

What is the first stage in engagement planning?

A

Establish planned scope

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22
Q

When establishing the planned scope of an audit engagement, what information should you draw on?

A
  1. Conclusions on risk maturity
  2. The audit strategy
  3. Title of the assignment
  4. Info linking audit to responses requiring assurance
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23
Q

What is the second stage of audit engagement planning?

A

Assess the risk maturity of the unit being audited

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24
Q

When assessing risk maturity at the engagement level, the criteria used should be…

A

Consistent with those used at macro level

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25
Q

If actual risk maturity is greater than or equal to expected risk maturity, how should IA proceed?

A

Carry on as planned

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26
Q

If actual risk maturity is less than expected, how should IA proceed?

A

Report to management, with conclusion that responses in scope not working effectively

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27
Q

If risk maturity is less than expected, is it necessarily the end of the audit?

A

No. Can restrict scope to responses identified as effective

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28
Q

What are the six key organisational systems?

A
  1. Fixed assets
  2. Payroll
  3. Purchasing (creditors)
  4. Sales (debtors)
  5. Stock
  6. Cash (bank)
29
Q

According to performance std 2200, “internal auditor must develop and d… a plan for each engagement, including scope, objectives, timing and resource allocations”

A

Document

30
Q

According to performance std 2200, “internal auditors must develop and document a plan for each e…, including the scope, objectives, timing and resource allocations”

A

Engagement

31
Q

According to performance std 2200, “internal auditors must develop and document a plan for each engagement, including the s…, objectives, timing and resource allocations”

A

Scope

32
Q

According to performance std 2200, “internal auditors must develop and document a plan for each engagement, including the scope, o…, timing and resource allocations”

A

Objectives

33
Q

According to performance std 2200, “internal auditors must develop and document a plan for each engagement, including the scope, objectives, t…, and resource allocations”

A

Timing

34
Q

According to performance std 2200, “internal auditors must develop and document a plan for each engagement, including the scope, objectives, timing and r… allocations”

A

Resource

35
Q

When planning an audit engagement, what are the four angles from which the audit area are appraised?

A
  1. Business objectives
  2. Key risks to business objectives
  3. Adequacy and effectiveness of risk management and control systems
  4. Opportunity for making significant improvements
36
Q

What should provide the rationale for an audit engagement?

A

Prior risk based macro planning

37
Q

What are the two main purposes of an audit engagement?

A
  1. Determine significant parts of audit

2. Undertake audit in premeditated and coordinated way

38
Q

What are the five general objectives of an audit engagement?

A
  1. Seek evidence that controls and risks in scope exist
  2. That controls function as intended
  3. That they are fit for job (effective)
  4. That they are efficient
  5. That they are adequate to maintain the control environment
39
Q

The “audit scope” is the e… of the audit and its limitations

A

Extent

40
Q

The “audit scope” is the extent of the audit and its l…

A

Limitations

41
Q

What determines the audit scope?

A
  1. Size of the business area
  2. Objectives of business area
  3. Risks of business area
  4. Nature of systems and procedures
42
Q

The audit scope identifies the b… of the engagement

A

Boundaries

43
Q

The audit scope pinpoints c… areas and risks to be examined

A

Control

44
Q

The audit scope pinpoints control areas and r… to be examined

A

Risks

45
Q

On what should be the whole focus of an audit engagement?

A

Management of risks

46
Q

What is the justification for testing in an audit engagement?

A

To evaluate risk mitigation activities

47
Q

The risk matrix includes detailed r…, causes and controls, plus IA’s test strategy and individual tests

A

Risks

48
Q

The risk matrix includes detailed risks, c…, and controls, plus IA’s testing strategy and individual tests

A

Causes

49
Q

The risk matrix includes detailed risks, causes, and c…, plus IA’s testing strategy and individual tests

A

Controls

50
Q

The risk matrix includes detailed risks, causes, and controls, plus IA’s t… s…, and individual test

A

Testing strategy

51
Q

The risk matrix includes detailed risks, causes, controls, plus IA’s testing strategy and individual t…

A

Tests

52
Q

What three things should the testing strategy consider?

A
  1. Definition of the risk area and reason for testing
  2. Definition of risk management strategies in place
  3. Identification of how to test risk management strategies
53
Q

What three questions should be asked once the testing strategy has been completed?

A
  1. What are root causes of risk?
  2. Have insurance or other transfer strategies already mitigated risk?
  3. Does risk impact on other risk areas?
54
Q

The audit engagement will be looking for information that confirms: c… m… exist, function as intended, and function to an adequate level

A

Control mechanisms

55
Q

The audit engagement will be looking for information that confirms: control mechanisms exist, f… as intended, and function to an adequate level

A

Function

56
Q

The audit engagement will be looking for information that confirms: control mechanisms exist, function as intended, and function to an a… l…

A

Level

57
Q

The audit engagement will be looking for evidence that controls are e… and e…

A

Efficient and effective

58
Q

List the five main methods for gathering information during audit engagement planning.

A
  1. Walkthroughs
  2. Focus groups
  3. Surveys
  4. One-to-one interviews
  5. Audit testing
59
Q

The purpose of analytical methods is to learn about the s… a… or activity being reviewed

A

Subject area

60
Q

The purpose of analytical methods is the learn about the subject area or a… being reviewed

A

Activity

61
Q

Analytical methods work by looking at r… within information and comparing to criteria

A

Relationships

62
Q

Analytical methods work by looking at relationships within information, and comparing to c…

A

Criteria

63
Q

What are the two main analytical methods?

A

Trend analysis and ratio analysis

64
Q

CAATTs have the ability to improve the r… and q… of IA analysis

A

Range and quality

65
Q

CAATTS can be used to a… and e… info from databases

A

Access and extract

66
Q

CAATTs can be used for s… and s… analysis

A

Sampling and statistical

67
Q

CAATTs can t…, check and perform calculations

A

Tabulate

68
Q

CAATTs can tabulate, check and perform c…

A

Calculations

Internal Audit Practice (2 decks)

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