Engagemetn Planning Flashcards
The established scope of the engagement must be sufficient to satisfy the objectives of the engagement. When developing the objectives of the engagement, the internal auditor considers the
Probability of significant noncompliance.
Information included in the engagement work program.
Results of engagement procedures.
Resources required.
Probability of significant noncompliance.
Documentation required to plan an internal audit engagement includes information that
Resources needed to complete the engagement were considered.
Planned engagement work will be completed on a timely basis.
Intended engagement observations have been clearly identified.
Internal audit activity resources are efficiently and effectively employed.
Resources needed to complete the engagement were considered.
In the planning phase, the scope of an internal audit engagement is defined by the
Engagement objectives.
Scheduling and time estimates.
Preliminary survey.
Engagement work program.
Engagement objectives.
Which of the following statements is an engagement objective?
Observe the deposit of the day’s cash receipts.
Analyze the pattern of any cash shortages.
Evaluate whether crash receipts are adequately safeguarded.
Recompute each month’s bank reconciliation.
Evaluate whether crash receipts are adequately safeguarded.
An external consultant is developing methods for the management of a city’s capital facilities. An appropriate scope of an engagement to evaluate the consultant’s product is to
Review the consultant’s contract to determine its propriety.
Establish the parameters of the value of the items being managed and controlled.
Determine the adequacy of the risk management and control systems for the management of capital facilities.
Review the handling of idle equipment.
Determine the adequacy of the risk management and control systems for the management of capital facilities.
Which of the following is least likely to be placed on the agenda for discussion at a pre-engagement meeting?
Objectives and scope of the engagement.
Client personnel needed.
Sampling plan and key criteria.
Expected starting and completion dates.
Sampling plan and key criteria.
As part of planning an engagement, the internal auditor in charge does all of the following except
Determine the period covered.
Conduct meetings with management responsible for the activity under review.
Distribute reports from meetings with management.
Determine to whom engagement results will be communicated.
Determine to whom engagement results will be communicated.
Internal auditors must make a preliminary assessment of risks when conducting an assurance engagement. This assessment may involve quantitative (objective) and subjective factors. The least subjective factor is
The organization’s recognized losses on derivatives.
The auditor’s assessment of management responses.
Changes in the auditee’s business forecast.
The evaluation of internal control.
The organization’s recognized losses on derivatives.
During a preliminary survey of the accounts receivable function, an internal auditor discovered a potentially major control deficiency while preparing a flowchart. What immediate action should the internal auditor take regarding the weakness?
Perform sufficient testing to determine its cause and effect.
Report it to the level of management responsible for corrective action.
Schedule a separate engagement to evaluate that segment of the accounts receivable function.
Highlight the weakness to ensure that procedures to test it are included in the engagement work program.
Highlight the weakness to ensure that procedures to test it are included in the engagement work program.
Data-gathering activities such as interviewing operating personnel, identifying standards to be used to evaluate performance, and assessing risks inherent in a department’s operations are typically performed in which phase of an audit engagement?
Field work.
Preliminary survey.
Engagement program developing.
Examination and evaluation of evidence.
Preliminary survey.
Which of the following activities represents the greatest risk to a post-merger manufacturing organization and is therefore most likely to be the subject of an internal audit engagement?
Combining imprest funds.
Combining purchasing functions.
Combining legal functions.
Combining marketing functions.
Combining purchasing functions.
The term “risk” is best defined as the possibility that
An internal auditor will fail to detect a material misstatement that causes financial statements or internal reports to be misstated or misleading.
An event could occur affecting the achievement of objectives.
Management will, either knowingly or unknowingly, make decisions that increase the potential liability of the organization.
Financial statements or internal records will contain material misstatements.
An event could occur affecting the achievement of objectives.
A chief audit executive may use risk analysis in preparing work schedules. Which of the following is not considered in performing a risk analysis?
Issues relating to organizational governance.
Skills available on the internal audit staff.
Results of prior engagements.
Major operating changes.
Skills available on the internal audit staff.
Risk modeling or risk analysis is often used in conjunction with development of long-range engagement work schedules. The key input in the evaluation of risk is
Previous engagement results.
Management concerns and preferences.
Specific requirements of professional standards.
Judgment of the internal auditors.
Judgment of the internal auditors.
Risk assessment is a systematic process for assessing and integrating professional judgments about probable adverse conditions or events. Which of the following statements reflects the appropriate action for the chief audit executive to take?
The CAE should generally assign engagement priorities to activities with higher risks.
The CAE should restrict the number of sources of information used in the risk assessment process.
Work schedule priorities should be established to lead the CAE in the risk assessment process.
The risk assessment process should be conducted at least every 3 to 5 years.
The CAE should generally assign engagement priorities to activities with higher risks.
