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Audit > Module D > Flashcards

Module D Flashcards

0
Q

Can public accounting firms provide internal audit services to publicly traded companies?

A

Yes, if they are not external audit clients

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1
Q

After SOX, public accounting firms could not provide internal audit services to…

A

Their external audit clients

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2
Q

Scope of the audit of internal auditors vs. External auditors

A

Scope of the audit is wider for internal auditors than external
Auditors

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3
Q

Internal auditors are responsible for what, that goes beyond fair presentation of financial statements?

A

The efficiency of the financial reporting process

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4
Q

How often do internal auditors perform audits? Why?

A

Monthly,

to make sure management is informed to make reliable decisions

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5
Q

Can accounting firms provide internal audit services to Nonpublic companies they are externally auditing?

A

Yes

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6
Q

External auditing refers to?

A

Financial statement auditing

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7
Q

Many corporations believe that they gain expertise and improve control over audit costs when…

A

The internal audit function is outsourced to an external audit firm

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8
Q

Internal auditing

A

Examination service provided to a company to assist the
Company to meet its corporate goals and objectives

By evaluating and recommending risk management, control
And governance processes

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9
Q

How do internal auditors demonstrate their independence?

2) what does this do?

A

They report directly to the audit committee

2) reduces management’s influence over audit scope and
Reporting

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10
Q

5 key elements in the internal audit charter approved by senior management

A

1 commitment from management to establish independent
Audit organization
2 defines authority and responsibility of audit department
3 defines scope of audit department’s activities
4 department’s authorization to perform audits, request materials
And gather evidence
5 performance and reporting requirements of audit department

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11
Q

Required attitude of internal auditors?

A

Impartial and unbiased

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12
Q

Internal auditors must not have any…

A

Conflicts of interest

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13
Q

Auditors should take great care to avoid even the appearance that they are…

A

Auditing their own work or are biased

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14
Q

The primary objective of internal audit is to…

A

Assist members of management and the Board in effective

Discharge of their responsibilities

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15
Q

Internal audit will furnish management with what 4 things?

A

1 analyses
2 recommendations
3 counsel
4 info concerning activities reviewed

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16
Q

Generally, internal auditors perform little of their work on…

A

The financial statements

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17
Q

Internal auditors are primarily concerned with…2

A

Affecting the company’s bottom line

and adding value to improve operations

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18
Q

Internal auditors add value to a company primarily by achieving the following 4 audit objectives

A

1 recognizing and analyzing industry, business and operational
Risks
2 improving the economy and efficiency of operations
3 ensuring compliance and management directives
4 serving as management’s representative

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19
Q

Internal auditors evaluate changes in the economy, business environment, technology, regulatory environment and managment. These types of changes often result in…

A

Additional risks for the organization

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20
Q

The internal audit department must take a proactive approach to…

A

Reduce or eliminate risks for the organization

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21
Q

Over a period of a few years, an auditor will have to…

A

Evaluate almost every department and aspect of the business

Making them a valuable asset to the business

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22
Q

Many organizations use internal audit as a training ground for…

A

Management

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23
Q

Management directives

A

Provided by management to all of organization’s departments
Regarding desired performance of company’s business

Delineate internal controls established by management to
Eliminate risk

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24
Q

What are management directives designed to ensure?3

A

1 company complies with laws and regulations
2 departments are operating efficiently and effectively
3 risks are minimized

25
Q

Internal audit department: management directives

A

Internal audit is charged with reporting on departments’

Compliance with these directives

26
Q

Internal auditors vs external auditors: compliance issues

2 for internal audit

A

External auditors review compliance with internal controls
That are relevant to the financial reporting process

Internal auditors concerned with noncompliance that 1) increases
Risk faced by company 2) diminishes efficiency/effectiveness
Of company’s operations

27
Q

Internal auditors serve as management’s representative by…

A

Visiting operations in remote locations management does not

Have time to visit

28
Q

Scope of service: Internal auditors make recommendations that result in…

A

Additional profits or cost saving for their companies

29
Q

Internal auditors can be thought of as management…

A

Consultants

30
Q

What 4 services are provided by internal auditors?

A

1 financial audits
2 compliance audits
3 operational audits
4 audit effectiveness of achieving program results

31
Q

Internal audit service:

Financial audits of…

A

Financial reports and accounting control systems

32
Q

Internal audit service:

Operational audits to evaluate…

A

Economy and efficiency of business process

33
Q

In financial statement audits, internal auditors may evaluate areas that management believes may be of…2

A

1 concern to external auditors

2 problem areas found in previous audit

34
Q

Internal auditors more likely perform audits of financial reports for…

A

Internal use

35
Q

Audits of financial reports for internal use

A

Provides management assurance that the info they are using

For decision making is relevant and reliable

36
Q

Compliance audit

A

Examination designed to ensure that organization is following
Laws, regulations and management directives

Performed by internal auditors

37
Q

Operational auditing

A

Examination designed to evaluate the processes and procedures
Of an organization Or an area within the organization

to ensure its operating effectively and efficiently

38
Q

The goal of operational auditing is to…

A

Help managers discharge their management responsibilities

And improve profitability

39
Q

Operational auditing is considered an…

A

Integral consulting service for internal auditors

40
Q

Internal audit supports the board of directors and its committees
By independently assessing…

A

The effectiveness of an organization’s system of internal

Controls and compliance with legal requirements

41
Q

Governance audits

A

Ensure management receives accurate, timely info concerning
Management and leadership throughout the organization

As well as proper implementation and execution of company
Strategy/plans

42
Q

Auditors who work with manufacturing companies may provide…

A

Quality control audits

43
Q

Quality control audits

A

Determine whether product meets standards established by

Management

44
Q

Quality control audits: customer service departments

A

Subject to quality audit to ensure customers are being served
In the manner prescribed by the company

45
Q

Environmental audit

A

Review procedures, record keeping, liability issues, compliance
As they relate to organization’s environmental issues

Make recommendations for company to be more environmentally
Friendly

46
Q

Sustainability audits

A

Internal auditors establish sustainability program, measurement
Criteria, reporting standards

47
Q

In sustainability audits, what 5 areas do auditors assist management in?

A 
1 governance
2 ethics
3 environment issues
4 health, safety and security
5 human rights and work conditions
48
Q

Sustainability audits are done for…

A

Corporate social responsibility

49
Q

3 standards of IIA

A

1 attribute standards
2 performance standards
3 implementation standards

50
Q

Internal audit reports are not…

A

Standardized, because they involve a variety of assignments

51
Q

Key criterion for an internal audit report

A

Clear and concise communication of findings and

recommendations

52
Q

4 qualities an internal audit report must have

A

1 accurate
2 concise
3 clear
4 timely

53
Q

5 elements that need to be described in quality auditor’s report

A 
1 condition
2 criteria
3 cause
4 effect
5 recommendation
54
Q

Exit conference

A

Internal auditors meet with business unit’s management team to
Review the audit report before its distributed to senior management

55
Q

3 purposes of exit conference, it to inform business units management of…

A

1 audit results
2 reach agreement on correctness of findings
3 learn corrective action management plans

56
Q

Who are the internal audit reports sent to?

A

1 CEO
2 audit committee
3 senior manager overseeing business unit

57
Q

Follow up

A

Check if actions implemented from internal auditors report

Are appropriately taken

58
Q

Only after the follow up is completed is the audit considered…

A

Closed

59
Q

Do external auditors have a follow up requirement?

A

No

Audit (36 decks)

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