Supervise Engagements Flashcards
Which of the following microcomputer applications would beleasthelpful in preparing audit working papers? Database software. Spreadsheet software. Word processing software. Utilities software.
Utilities software.
You are an audit supervisor, reviewing the working papers of a staff auditor’s overall examination of the firm’s sales function. The pages are not numbered or cross-referenced. Further, the working papers were dropped and reassembled at random before they were brought to you.
You decide to put the working papers in the proper order according to the IIAStandards. The first stage of this activity is to identify each page as a part of (1) the preliminary survey, (2) the review of the adequacy of the system of internal control, (3) the review for effectiveness of the system of internal control, or (4) the review for quality of performance.
The second page you select documents an interview with a salesperson discussing the overall sales cycle. This page belongs with the following activity:
Review for adequacy of the system.
Review for effectiveness of the system.
Preliminary survey.
Review for quality of performance.
Preliminary survey.
Working papers should be disposed of when they are of no further use. Retention policies:
Should be approved by the external auditor.
Should be prepared by the audit committee.
Should be approved by legal counsel.
Should specify a minimum retention period of three years.
Should be approved by legal counsel.
An internal audit manager is reviewing the audit working papers prepared by the staff. Which of the following review comments istrue?
Each working paper should include the actual and the budgeted time related to such audit work.
Including copies of all the forms and directives of the auditee department constitutes “unnecessary” overdocumentation.
Each working paper should include a statement regarding the auditees’ cooperation during the conduct of the audit.
Conclusions need not be documented in the working papers when the audit objectives are achieved.
Including copies of all the forms and directives of the auditee department constitutes “unnecessary” overdocumentation.
Internal auditors often include summaries within their working papers. Which of the followingbestdescribes the purpose of such summaries?
Summaries are usually required for the completion of each section of an audit program.
Summaries are prepared to conform to the IIIAStandards.
Summaries are used to document the fact that the auditor has considered all relevant evidence.
Summaries distill the most useful information from several working papers into a more usable form.
Summaries distill the most useful information from several working papers into a more usable form.
Working papers provide the documentary support for the internal auditor’s report. Which of the following isnota good practice for working papers?
Internal auditors within a given organization should develop standardized methods for organization and documentation.
Working papers should be sufficient to support the internal auditors’ report without additional verbal elaboration by the internal auditor.
Working papers should be organized chronologically, that is, with the papers prepared earliest at the front of the file.
Working papers should be kept secure at all times to prevent accidental loss or unauthorized access.
Working papers should be organized chronologically, that is, with the papers prepared earliest at the front of the file.
An internal auditing supervisor, when reviewing a staff member’s working papers, identified an unsupported statement that the auditee’s unit was operating inefficiently. What action should the supervisor direct the auditor to take?
Remove the comment from the working paper file.
Obtain the auditee’s concurrence with the statement.
Explain that it is the opinion of the staff member.
Research and identify criteria to measure operating efficiency.
Research and identify criteria to measure operating efficiency.
When audit conclusions are challenged, the auditor?s factual rebuttal is best facilitated by:
Cross-referencing of the working papers.
Summaries in the audit program.
Pro forma working papers.
Explicit procedures in the audit program.
Cross-referencing of the working papers.
When determining the retention period for the work papers of a contract audit, it is best to:
Review the corporate policy manual developed by the records management area for the section regarding business records.
Seek the assistance of the legal department to ensure compliance with contract provisions.
Follow the contractor’s own record retention policies.
Check with the corporate accounting department since accounting records are involved.
Seek the assistance of the legal department to ensure compliance with contract provisions.
Working papers are the property of the auditor. Good control of working papers:
Requires retention of working papers for at least three years.
Prevents surrender to a summons issued by a governmental agency.
Requires that only the auditor who created the working paper change electronic working papers.
Precludes showing working papers to auditees.
Requires that only the auditor who created the working paper change electronic working papers.
Productivity statistics are provided quarterly to the board of directors. An auditor checked the ratios and other statistics in the four most recent reports. The auditor used scratch paper and copies of the board reports to verify the accuracy of computations and compared the data used in the computations with supporting documents. The auditor wrote a note describing this work for the working papers and then discarded the scratch paper and report copies. The auditor’s note stated: “The ratios and other statistics in the quarterly board reports were checked for the last four quarters, and appropriate supporting documents were examined. All amounts appear to be appropriate.”
In this situation:
The auditor did not consider whether the information in the board report was compiled efficiently.
The auditor’s working papers are not sufficient to facilitate an efficient review of the auditor’s work.
The auditor should have included the scratch paper in the working papers.
Four quarters is not a large enough sample on which to base a conclusion.
The auditor’s working papers are not sufficient to facilitate an efficient review of the auditor’s work.
An internal auditing department has a project under way to determine whether it can go to electronic working papers. Decision criteria will be based primarily on the requirements of internal auditing standards and on the experience of other audit departments.
Which of the following long-term effects associated with electronic working papers is most likely to occur after conversion from manual working papers?
Working papers must be printed.
Reductions in the average time to complete audits.
Significant training needs for auditors.
More comprehensive working papers.
Reductions in the average time to complete audits.
Working papers should include:
All work papers prepared during a previous audit of the same area.
Documentation of the examination and evaluation of the adequacy and effectiveness of the system of internal control.
Copies of all source documents examined in the course of the audit.
Copies of all procedures that were reviewed during the audit.
Documentation of the examination and evaluation of the adequacy and effectiveness of the system of internal control.
An audit working paper is complete when:
The audit objective has been met.
Working papers are properly indexed and cross-indexed.
Condensation and careful summarization of detail is present.
Operational activity describing the essential basis of the audit has been included.
The audit objective has been met.
A recent fire in a company’s warehouse has destroyed a large portion of its inventory. Management is in the process of filing an insurance claim and needs to use the internal auditors’ inventory working papers in preparing the claim. According to the IIAStandards, which of the following iscorrect?
Management may use the internal auditors’ inventory working papers in preparing the insurance claim, but the director of internal auditing should approve such use.
Management should be precluded from preparing the insurance claim, and such function should be given to the internal auditing department.
Management may use the internal auditors’ inventory working papers in preparing the insurance claim, but both the company’s external independent auditors and the director of internal auditing should approve such use.
Management may not use any of the internal auditors’ working papers in preparing the insurance claim.
Management may use the internal auditors’ inventory working papers in preparing the insurance claim, but the director of internal auditing should approve such use.
