AUDIT

1) Which of the following is TRUE regarding internal audit?

I. Internal auditor will report their findings to the shareholder.

II. Internal audit report will not be available publicly as the report is used internally.

III. To be effective the staff in the internal audit department must be free from operational roles.

IV. One of internal audit roles is to improve the company’s operation by reviewing the efficiency and effectiveness of internal controls.

• I, II and III

• I, II and IV

• I, III and IV

• II, III and IV

Which of the following are the key roles of internal auditor?

I. Assessing compliance with laws and regulations.

II. Fraud investigation

III. Testing the effectiveness of internal controls.

IV. Evaluating the company's risk identification and management processes.

• I, II and III

• I, II and IV

• I, III and IV

• II, III and IV

Which of the following is the quality of internal audit function.

• Work plan agreed is agreed by the management of the company

• The internal auditors have other operational roles apart from the internal auditor role.

• Internal auditor should not be allowed to access to every part of the company without proper permission.

• Chief internal auditor is appointed by the audit committee

Which of the following is a valid reason outsource the internal audit function?

I. Access to new market place technologies such as audit methodology software without associated costs.

II. Costs of employing permanent staff are avoided.

III. A professional firm is likely to more experienced and able to provide better recommendations for improvement.

IV. Expected efficiencies from having the external auditor providing internal audit services as the staff will already have a good understanding of the company.

• I, II and III

• I, II and IV

• I, III and IV

• II, III and IV

The following are the disadvantages of outsourcing internal audit function EXCEPT;

• Possible conflict of interest if provided by the external auditors

• Increase management time in administering an in-house department.

• The company will have lack of control over the quality of the internal audit services by outsourced firm.

• The effectiveness of the internal audit function may be reduced due to cost constraint.

The following are TRUE about value for money (VFM) audit EXCEPT;

• VFM audit is concerned with obtaining the best combination of services for the least resources.

• The performance indicators in VFM audit provide a measure of economy, efficiency and experience.

• The economy component of VFM audit focuses on the ability of the organization to obtain the best quality of resources for the minimum cost.

• The efficiency component of VFM audit focuses on obtaining the maximum departmental/organisational outputs with the minimum use of resources.

Which of the following is FALSE regarding the audit of IT system?

• The internal auditor only focusses on whether the IT systems provide a reliable basis for the preparation of financial statement

• The internal auditor will assess whether the company is getting value for money from their IT system.

• The internal auditor assesses the effectiveness of the procurement process for the IT system.

• The internal auditor will determine the appropriateness of the ongoing management and maintenance of the IT system.

The following are TRUE about financial audit which is conducted by internal auditor EXCEPT;

• Financial audit is conducted to ensure that the information produced is reliable and produced in an efficient timely manner.

• Financial audit is conducted to assess the financial health of a business

• The internal financial audit report will be presented to the shareholder.

• The internal auditor must ensure that there are mechanisms in place for the early identification of financial risk

Which of the following statement is TRUE regarding the internal audit reporting?

• The internal audit report has a formal reporting structure.

• The external auditor will not inspect the internal audit report prepared by internal auditor

• The internal audit report will be used for external purposes and presented to the shareholder.

• The format for internal audit will be based on the requirement of the audit committee or board of director.

How the company establishes controls over outsourced internal audit department?

I. Agreeing internal audit work plans in advance of work being performed

II. Ensuring appropriate audit methodology (working papers/reviews) is maintained

III. The outsourced internal auditors are objective and independent if external auditor is used.

IV. Setting performance measures in terms of cost and areas of the business reviewed and investigating any variances

• I, II and III

• I, II and IV

• II, III and IV

• All of the above