Section 1 (Chap 1 & 2)

Question 1

For effective audit planning what is needed?

Answer 1

A thorough understanding of business process applications and controls

Question 2

While planning an individual audit assignment, what should an IS auditor consider?

Answer 2

Prior audit reports
Risk assessment reports
Regulatory requirements
Standard operating processes
Technological requirements

Question 3

What is the next step after doing the overall annual planning?

Answer 3

planning individual audit assignments

Question 4

Who should the approved audit plan be communicated to first?

Answer 4

Senior management
Business functions and other stakeholders
The internal audit team

Question 5

What can risk factors affect?

Answer 5

The frequency of the audit

Question 6

How is selection criteria carried out?

Answer 6

Each business process may undergo qualitative or quantitative risk assessment in respect to relevant risk factors

After risk is evaluated, criteria may be defined to determine the risk of each process

Audit plan can then be designed to consider all high-risk areas

Question 7

What should be included in an audit universe>

Answer 7

All of the significant processes of the enterprise’s business should be included.

Question 8

What is one of the criteria needed for audit planning?

Answer 8

Having an audit universe

Question 9

What are some of the benefits of audit planning?

Answer 9

Helps the auditor focus on high-risk areas
Helps in the identification of resource requirements to conduct the audit
Helps to estimate the budget for the audit
Helps to carry out audit work in a defined structure, which ultimately benefits the auditor as well as the auditee units

Question 10

An audit plan helps to identify and determine what aspects?

Answer 10

Objectives of the audit
Scope of the audit
Periodicity of the audit
Members of the audit team
Method of the audit

Question 11

Risk Factors

Answer 11

Factors that have an impact on risk. The presence of those factors increases the risk, whereas the absence of those factors decreases the risk.

Question 12

Quantitative Risk Assessment

Answer 12

Risk is assessed using numerical parameters and is quantified

Question 13

Qualitative Risk Assesment

Answer 13

Risk is assessed using qualitative parameters such as high, medium, and, low

Question 14

What is an audit universe?

Answer 14

An inventory of all the functions/processes/units under the organization

Question 15

What should happen if an audit is outsourced to another audit firm?

Answer 15

The objective of the audit, along with its detailed scope should be incorporated in an audit engagement letter

Question 16

What does an audit charter include?

Answer 16

The mission, purpose, and objective of the audit function
The scope of the audit function
The responsibilities of management
The responsibilities of internal auditors
The authorized personnel of the Internal audit work

Question 17

What does the charter of an audit department do?

Answer 17

Authorizes the accountability and responsibility of the audit department

Question 18

What are the four features of an audit charter?

Answer 18

1. It is a formal document defining the internals audits objective, authority, and responsibility. It includes the entire scope of audit activities.
2. An audit charter must be approved by top management
3. An audit charter should be a static document- procedural aspects should not be included nor should there be a calendar
4. Should be reviewed annually

Question 19

How is the independence of the audit function preserved?

Answer 19

Through a management-approved audit charter

Question 20

In most organizations who does the internal audit function reports to who?

Answer 20

The audit committee of the board, this helps to preserve the independence of the audit

Question 21

Who should the internal audit be reported to?

Answer 21

A board-level committee

Question 22

What type of activity is an internal audit?

Answer 22

An independent one

Question 23

What type of planning does audit planning include?

Answer 23

Both short and long term planning

Question 24

What is needed to plan an audit?

Answer 24

A thorough understanding of business processes, business applications, and relevant controls.

Question 25

What should an Audit Plan be aligned with?

Answer 25

The Audit Charter of the organization

Question 26

What is an audit plan?

Answer 26

A step-wise approach to be followed to conduct and audit

Question 27

What does the charter of an audit department do?

Answer 27

Authorizes the accountability and responsibility of the audit department