Pre-Quizes Flashcards
An internal auditor who had been supervisor of the accountts payable section should not audit that section:
Because there is no way to measure a reasonable period of time in which to establish independence.
Until enough time has elapsed to allow the new supervisor to influence the system of controls over accounts payable.
Until after the next annual review by the external auditors.
Until it is clear that the new supervisor has assumed responsibility.
Until enough time has elapsed to allow the new supervisor to influence the system of controls over accounts payable.
In recent years, control self-assessment has become a valuable auditing tool, especially in terms of:
Determining the accuracy and understandability of financial events as expressed in financial documents. Identifying workers who may have been involved in fraudulent activities. Uncovering problems in areas such as organizational morale and communication. Conducting employee performance appraisals
Uncovering problems in areas such as organizational morale and communication.
An organization’s new president meets the CAE for the first time and asks him or her to briefly describe the department’s overall responsibility, The CAE states that internal audit’s overall responsibility is to:
Act as an independent, objective assurance and consulting activity designed to add value and improve an organization's operations. Review the means of safeguarding assets, and, as appropriate, verify the existence of such assets. Ensure compliance with policies, plans, procedures, laws, and regulations that could have a significant impact on operations and reports. Review the reliability and integrity of financial and operating information and the means used to identify, measure, classify, and report such information
Act as an independent, objective assurance and consulting activity designed to add value and improve an organization’s operations.
An audit of a foreign subsidiary disclosed payments to local government officials in return for orders. What action does the Code of Ethics suggest for internal auditors in such a case?
Refrain from any action that might be detrimental to their employers. Report the incident to appropriate regulatory authorities. Inform appropriate organization officials. Report the practice to the Board of Directors of the IIA.
Inform appropriate organization officials.
Internal Auditors must have competent interpersonal skills. Which of the following does not represent an attribute of interpersonal skills?
Communication Leadership Project Management Team capabilities
Project Management
Within the context of internal auditing, assurance services are best defined as:
Objective examination of evidence for the purpose of providing independent assessments. Advisory services intended to add value and improve an organization's operations. Professional activities that measure and communicate financial and business data. Objective evaluations of compliance with policies, plans, procedures, laws, and regulations.
Objective examination of evidence for the purpose of providing independent assessments.
The scope of internal auditing work encompasses a systematic, disciplined approach to evaluating and improving the adequacy and effectiveness of all the following processes except
Risk management Control. Financial statements. Governance.
Financial statements.
As used by the internal auditing profession, the Standards refers to all of the following except:
Criteria by which the operations of an internal audit department are evaluated and measured. Criteria which dictate the minimum level of ethical actions to be taken by internal auditors. Statements intended to represent the practice of internal auditing as it should be. Criteria that are applicable to all types of internal audit departments.
Criteria which dictate the minimum level of ethical actions to be taken by internal auditors.
Which if the following would constitute a violation of the Code of Ethics?
Discussing your organization's data processing control system at a trade convention. Purchasing stock in a target after overhearing an organization executive discussing a possible acquisition. Deleting sensitive information from a report at the request of senior management. Investigating executive expense reports based on rumors of padding.
Purchasing stock in a target after overhearing an organization executive discussing a possible acquisition.
The purpose of the Standards (International Standards for the Professional Practice of Internal Auditing) include all of the following except
Establishing the basis for the measurement of internal audit performance. Guiding the ethical conduct of internal auditors. Stating basic principles that represent the practice of internal auditing as it should be. Fostering improved organizational processes and operations.
Guiding the ethical conduct of internal auditors.
In recent years, control self-assessment has become a valuable auditing tool, especially in terms of:
Determining the accuracy and understandability of financial events as expressed in financial documents. Identifying workers who may have been involved in fraudulent activities. Uncovering problems in areas such as organizational morale and communication. Conducting employee performance appraisals.
Uncovering problems in areas such as organizational morale and communication.
An auditor often faces special problems when auditing a foreign subsidiary. Which of the following statements is FALSE with respect to the conduct of international audits?
The IIA Standards do not apply outside of the U.S. The auditor should determine whether managers are in compliance with local laws. There may be justification for having different organization policies in force in foreigh branches. It is preferable to have multilingual auditors conduct audits at branches in English-speaking nations.
The IIA Standards do not apply outside of the U.S.
Directors, management, external auditors, and internal auditors all play important roles in creating proper control processes. Senior management is primarily responsible for
Establishing and maintaining an organizational culture. Reviewing the reliability and integrity of financial and operational information. Ensuring that external and internal auditors oversee the administration of the system of risk management and control processes. Implementing and monitoring controls designed by the board of directors.
Establishing and maintaining an organizational culture.
All of the following are primary objectives of the overall management process except:
Improving the effectiveness of governance, risk management, and control processes. Compliance with laws, regulations, ethical and business norms, and contracts. Identification of risk exposures and use of effective strategies to control them. Safeguarding of the organization's assets.
Improving the effectiveness of governance, risk management, and control processes.
Which of the following is most likely an internal audit role in a less structured governance process?
Designing specific governance processes. Playing a consulting role in optimizing governance practices and structure. Providing advice about basic risks to the organization. Evaluating the effectiveness of specific governance processes.
Providing advice about basic risks to the organization.
A basic principle of governance is
Assessment of the governance process by an independent internal audit activity Holding the board, senior management, and internal audit activity accountable for its effectiveness. Exclusive use of external auditors to provide assurance about the governance process. Separation of the governance process from promoting an ethical culture in the organization.
Assessment of the governance process by an independent internal audit activity
Risk management processes most likely are NOT
Quantitative or subjective Embedded in business units or centralized Formalized even in small organizations Formal or informal
Formalized even in small organizations
Which of the following members of an organization has ultimate ownership responsibility of the ERM, provides leadership and direction to senior managers, and monitors the entity’s overall risk activities in relation to its risk appetite?
Chief Risk Officer Chief Executive Officer Interal auditors Chief Financial Officer.
Chief Executive Officer
What action must the cheif audit executive take when (s)he believes that senior management has accepted a level of residual risk that is unacceptable to the organization?
Report the matter to the board for resolution Reported the matter to an external authority. Discuss the matter with external auditors. Discuss the matter with senior management.
Discuss the matter with senior management.
The board’s expectations of the internal audit activity regarding the risk management process is
Noted in the work programs for formal consulting engagements. Included in the business continuity plan Codified in the charters of the internal audit activity and the board. Reviewed by the internal auditors immediately following a disaster.
Codified in the charters of the internal audit activity and the board.
