Internal and Gov't Audit, Fraud Examination

Question 1

Analyzing proprietary schools’ spending to train students for oversupplied occupations is an example of (blank) auditing

Answer 1

Economy and efficiency or program results, Governmental

Question 2

Studying the DOD expendable launch vehicle program is an example of a (blank) audit done by a (blank) auditor

Answer 2

Economy and efficiency or program results, Governmental

Question 3

Reporting on the need for states to consider chemical use reporting requirement data is an example of a (blank) audit done by a (blank) auditor

Answer 3

Economy and efficiency or program results, Governmental

Question 4

Determining the fair presentation in conformity with GAAP of an advertising agency’s financial statements is an example of a (blank) audit done by a (blank) auditor

Answer 4

Financial statement, Independent CPA

Question 5

Determining costs of municipal garbage pickup services compared to comparable service subcontracted to a private business is an example of a (blank) audit done by a (blank) auditor

Answer 5

Economy and efficiency, Internal auditors

Question 6

Auditing a tax shelter partnership’s financing terms is an example of a (blank) audit done by a (blank) auditor

Answer 6

Compliance, IRS auditor

Question 7

Studying private aircraft manufacturer’s test pilot performance in reporting on results of test flights is an example of a (blank) audit done by a (blank) auditor

Answer 7

Compliance, Internal Auditors

Question 8

Periodically having U.S. comptroller of currency examine a national bank for solvency is an example of a (blank) audit done by a (blank) auditor

Answer 8

Compliance, Bank examiner

Question 9

Evaluating the promptness of materials inspection in a manufacturer’s receiving department is an example of a (blank) audit done by a (blank) auditor

Answer 9

Compliance or economy and efficiency, Internal auditors

Question 10

Rendering a public report on the assumptions and compilation of a revenue forecast by sports stadium complex is an example of a (blank) audit done by a (blank) auditor

Answer 10

Financial statement, Independent CPA

Question 11

When auditing with “fraud awareness,” auditors should especially notice and follow up employee activities to ensure (blank and blank) are restricted to the cashier to improve accountability

Answer 11

Cash disbursement and bank statement reconciliation

Question 12

An objective and systematic examination of a program against its objective criteria are known as (blank) audits

Answer 12

Performance

Question 13

Define Internal Auditing

Answer 13

an independent, objective, assurance and consulting activity designed to add value and improve an organization’s operations. It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve effectiveness of risk management, control, and governance processes.

Question 14

The four audit objectives of an Internal Audit

Answer 14

1. Recognizing and analyzing industry, business, and operational risks.
2. Improving the economy and efficiency of the operations
3. Ensuring compliance with management directives
4. Serving as management’s representative

Question 15

Financial, compliance, operational, governance, QC, environmental, and sustainability are all examples of (blank) audits

Answer 15

internal

Question 16

To establish an independent and objective internal audit department as well as its scope, authorizations, and reporting requirements, organizations should develop an

Answer 16

audit charter

Question 17

(Blank) are prepared by internal auditors for internal use by management to evaluate areas of concern or correct errors prior to an external audit

Answer 17

Financial audits

Question 18

This type of audit provides managers assurance that the info they are using in the decision-making process is relevant and reliable

Answer 18

Financial audit

Question 19

(Blank) address management’s concern regarding policies, procedures, laws and regulations

Answer 19

Compliance audits

Question 20

Unfavorable internal audits should include what 5 items about their findings

Answer 20

1. Condition – what was found
2. Criteria – basis for determining that the condition was improper
3. Cause – why did this happen?
4. Effect – why is this bad?
5. Recommendation – what do you think should be done about this?

Question 21

The three types of governmental audits performed by the GAO are

Answer 21

Financial Statement Audits

Attestation Engagements

Performance Audits
Examples include: assessing extent goals have been achieved, relative cost and benefits or cost effectiveness of program performance, degree to which program produced intended results or unintended effects, etc.

Question 22

Studying business operations for the purpose of recommendations regarding efficient use of resources, effective achievement of business objectives, and company policy compliance is a (blank) audit

Answer 22

Operational

Question 23

(Blank) audits are designed to help provide management with high-quality information for implementation and execution of company strategy and decisions about leadership

Answer 23

Governance

Question 24

The international organization that governs standards, continuing education, and general rules of conduct for internal auditors is the

Answer 24

IIA (Institute of Internal Auditors)

Question 25

The IIA issues these standards, broken into three categories

Answer 25

Int’l Standards for the Professional Practice of Internal Auditing

1. Attributes (independence and objectivity of auditors and org.)
2. Performance (quality)
3. Implementation (specific standards for specific types of engagements)

Question 26

The IIA administers what certification program

Answer 26

CIA (certified internal auditor)

Question 27

Define governmental auditing

Answer 27

services performed in an effort to hold the government accountable and transparent to the public regarding the linking of resources to related program results

Question 28

the accounting, auditing, and investigative agency of the federal government.

Answer 28

Governmental Accountability Office (GAO)

Question 29

Three types of governmental audits performed by the GAO:

Answer 29

Financial Statement, Attestation Engagements, Performance Audits (assessing achievement of goals, relative cost benefits/cost effectiveness of programs, degree of which programs produced intended results)

Question 30

Definition of performance audit

Answer 30

provide assurance on economy, efficiency, and program results and therefore require special consideration with regard to procedures performed

Question 31

Generally Accepted Governmental Auditing Standards that guide governmental audits are also referred to as

Answer 31

GAGAS, the Yellow Book

Question 32

What three additional rules are included in GAGAS (beyond GAAS)

Answer 32

1.Single Audit Act of 1984

2. OMB Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards
3. AICPA Audit and Accounting Guide, “Audits of State and Local Governments”

Question 33

GAGAS requires which report in addition to those required by GAAS

Answer 33

A report on the entity’s compliance with laws and regulations is also issued.
(in addition to F/S and intern control risk assessment)

Question 34

Who is covered under the Single Audit Act of 1984

Answer 34

entities who receive specified levels of financial assistance from the federal government

Question 35

The Single Audit Act of 1984 and Amendments of 1996 allow

Answer 35

organizations to obtain a single audit, on which all agencies can rely (F/S in accordance with GAAP, internal controls are in compliance w/ laws and regs, whether compliance have a material effect on F/S and the federal asst. program

Question 36

The Single Audit Act established an annual audit requirements for entities expending $(blank) or more of federal funds

Answer 36

$750,000

Question 37

IIA standards specifically reference the need for internal audit to do these two things with respect to fraud

Answer 37

1. evaluate how fraud risk is managed
2. evaluate the potential for fraud

Question 38

The chain of custody is the crucial link of the evidence to the suspect called the (Blank) of evidence by attorneys and judges.

Answer 38

relevance

Question 39

A typical white collar criminal is

Answer 39

generally acting alone and socially conforming

Question 40

The responsibility for setting the tone at the top rests with

Answer 40

upper management

Question 41

Regarding issues related to fraud, governmental auditors are required to

Answer 41

know applicable laws and regulations

design the audit to detect abuse and illegal acts

prepare written reports regarding indications of illegal acts

Question 42

To aid in management decision making, internal auditors perform (blank) audits

Answer 42

governance