CHAPTER 5

Question 1

Statement A: Histogram - plots categorical variables where gaps or spaces between the bars differentiate one variable from each other.
Statement B: Control chart has a central line for the average or target spaces between the bars differentiate one variable from each other
value for the process.
A. Both statements are true.
B. Both statements are false.
C. Only Statement A is correct.
D. Only Statement B is correct.

Answer 1

D. Only Statement B is correct.

Question 2

Which of the following are not true about Pareto chart?
A. Pareto principle posits that for many events approximately 80% of the effects are caused by 20% of the causes.
B. Pareto charts are designed to organize data and can be used to prioritize improvement effort by focusing on major root causes of the problems under review.
c. Pareto charts can be used to indicate the frequency of defects but not their cumulative impact.
D. Pareto chart arranges the bars from largest to smallest, from left to
right.

Answer 2

c. Pareto charts can be used to indicate the frequency of defects but not their cumulative impact.

Question 3

Which of the following is not a tool to identify root causes of a
problem?
A. Pareto chart
B. Fishbone diagram
c. 5S
D. 5 Whys

Answer 3

D. 5 Whys

Question 4

RACI diagram, a linear responsibility chart, are used to identify the roles and responsibilities of the following except:
A. Responsible
B. Accountable
C. Consulted
D. Initiator

Answer 4

D. Initiator

Question 5

One of the 5S which translates to “sort”, which calls for workers to remove unnecessary items and dispose of them appropriately.
A. Seiton
B. Seiri
C. Seiso
D. Seiketsu

Answer 5

B. Seiri

Question 6

Statement A: Color-code and password-protection of spreadsheet so data can only be entered on predetermined fields is an application of Poka Yoke.
Statement B: The best Poka Yoke solutions are as simple as possible, use the lowest cost solutions, and make the solution mandatory and intuitive.

A. Both statements are true.
B. Both statements are false.
C. Only Statement A is correct.
D. Only Statement B is correct.

Answer 6

A. Both statements are true.

Question 7

Which of the following are common issues with benchmarking tool used by internal auditors?
A. Benchmarking can show areas of excellence within the organization but internal audits should focus on exception-based reporting.
B. Typical metrics used in benchmarking are time, quality, and cost.
C. Benchmarking information is often proprietary and organizations are reluctant to share it with other organizations.
D. Benchmarking need face-to-face contact or discussion with other are reluctant to share it with other organizations.

Answer 7

C. Benchmarking information is often proprietary and organizations are reluctant to share it with other organizations.

Question 8

Charts that show the frequency distribution of numerical data using rectangles, each of which represents intervals that display the probability distribution of a continuous variable.
A. Control Chart
B. Histograms
C. Pareto chart
D. Bar chart

Answer 8

B. Histograms

Question 9

Internal audit tool designed to organize data and can be used to prioritize improvement effort by focusing on major root causes of the problems under review.
A. Control Chart
B. Histograms
c. Pareto chart
D. Flowchart

Answer 9

c. Pareto chart

Question 10

When searching for the root cause of issues, auditors are effectively searching for the source of variation, which are often grouped into categories, which category is not included.
A. People
b. machines
c. measurements
d. system

Answer 10

d. system

Question 11

Process of comparing statistical information consists of comparing least one performance metric to a standard, or multiple performance metrics to each other.
A. Poka Yoke
B. Benchmarking
C. RACI Diagram
D. Brainstorming

Answer 11

B. Benchmarking

Question 12

This approach is useful for compliance reviews where operators should requires. It also useful for financial reviews, where accountants and others involved in record keeping and preparing financial statements
must adhere to applicable accounting standards.
A. Cause and Effect
B. Force Field Analysis
C. Process Flow Map
D. Value Stream Map

Answer 12

A. Cause and Effect

Question 13

The following are benefits of using flowcharts in identification of
control points, except
A. flexible
B. easy to review
C. useful in discussion
D. may be too detailed if the area is complex

Answer 13

D. may be too detailed if the area is complex

Question 14

Rate at which the production operation produces output or average
amount of time, or pace, of activities.
A. Lead Time
B. Takt Time
C. Waiting Time
D. Over time

Answer 14

B. Takt Time

Question 15

Structured form or document used to collect and analyze data, often done real time where the data are generated or collected.
A. Tally Sheet
B. Check Sheet
C. Check List
D. None of the above

Answer 15

B. Check Sheet

Question 16

Recommendations should be included in final audit communications to:
a. Provide management with options for addressing audit observations.
b. Ensure that problems are resolved in the manner suggested by the auditor.
C. Minimize the amount of time required to correct audit observations.
D. Guarantee that audit observations are addressed, regardless of cost.

Answer 16

a. Provide management with options for addressing audit observations.

Question 17

Reported internal audit observation emerges as a result of comparing “what should be” with “what is”. In determining “what should be” during an internal audit engagement, which of the following would be the least appropriate criterion against which to asses current controls?
a. industry best practices
B. Control policies and procedures prescribed by senior management.
C. A standard of control effectiveness determined by Internal audit function
d. The controls documented as being in place during the last audit.

Answer 17

d. The controls documented as being in place during the last audit.

Question 18

An excerpt from an internal audit observation indicates that travel advances exceeded prescribed maximum amounts. Company policy provides travel funds to authorized employees for travel. Advances are not to exceed 45 days of anticipated expenses. Company procedures do not require justification for large travel advances. In this audit observation, the element of an audit finding known as “effect” is:
A. Advances are not to exceed estimated expenses for 45 days.
B. Travel advances exceed prescribed maximum amounts.
C. Employees accumulate large, unneeded advances.
D. Unauthorized employees are given travel advances.

Answer 18

C. Employees accumulate large, unneeded advances.

Question 19

The following data was gathered during one of the recent audits of Cash Disbursement Section. One of the findings was on the outdated Delegation of Authority to policy. In preparing a report of the findings, identify the elements of an audit finding for each data.
i. . The delegation authority is updated biannually and not when changes in personnel or responsibilities of authorized individuals occur.
II. The delegation of authority policy list three individuals who are no longer with the company. Additionally, four individuals were identified who are new in their positions that should have disbursement authority, but are not listed in the policy.
III. Disbursements may be made that are not in accordance with management’s or BOD’s direction.
IV. Authority over the disbursement of funds should only be delegated to individuals whose responsibility justifies such authority.

Answer 19

A. Cause, Condition, Effect, Criteria

Question 20

In the element of audit findings, this refers to what the auditor
discovered as a result of applying auditing procedures.
A. Findings
B. Condition
C. Cause
D. Effect

Answer 20

B. Condition