PROGRESS CHECK CIA UNIT 3 & 4 PT PLN (Persero)

An internal auditor observes that a receivables clerk has physical access to and control ofcash receipts. The auditor worked with the clerk several years before and has a high level of trust in the individual. Accordingly, the auditor notes in the engagement working papers that controls over receipts are adequate. Has the auditor exercised due professional care?

• Yes, reasonable care has been taken.
• No, irregularities were not noted.
• No, alertness to conditions most likely indicative of irregularities was not shown.
• Yes, the engagement working papers were annotated.

A certified internal auditor performed an assurance engagement to review a department store’s cash function. Which of the following actions will be deemed lacking in due professional care?

• Organizational records were reviewed to determine whether all employees who handle cash receipts and disbursements were bonded.
• A flowchart of the entire cash function was developed, but only a sample of transactions was tested.
• The final engagement communication included a well-supported recommendation for the reduction in staff, although it was known that such a reduction would adversely affect morale.
• Because of a highly developed system of internal control over the cash function, the final engagement communication assured senior management that no irregularities existed.

With regard to the exercise of due professional care, an internal auditor should

• Consider the relative materiality or significance of matters to which assurance procedures are applied.
• Emphasize the potential benefits of an engagement without regard to the cost.
• Consider whether criteria have been established to determine whether goals are achieved, not whether those criteria are adequate.
• Select procedures that are likely to provide absolute assurance that irregularities do not exist.

Due professional care calls for

• Detailed reviews of all transactions related to a particular function.
• Infallibility and extraordinary performance when the system of internal control is known to be weak.
• Consideration of the possibility of material irregularities during every engagement.
• Testing in sufficient detail to give absolute assurance that noncompliance does not exist.

Internal auditors are responsible for continuing their education to maintain their proficiency. Which of the following is true regarding the continuing education requirements of the practicing internal auditor?

• Practicing certified internal auditors are required to obtain 40 hours of continuing professional education every 2 years.
• CIAs have formal requirements that must be met in order to continue as CIAs.
• Attendance, as an officer or committee member, at formal IIA meetings does not meet the criteria of continuing professional development.
• In-house programs meet continuing professional education requirements only if they have preapproval by The IIA.

An internal auditor judged an item to be immaterial when planning an assurance engagement. However, the assurance engagement may still include the item if it is subsequently determined that

• Sufficient staff is available.
• Adverse effects related to the item are likely to occur.
• Related information is reliable.
• Miscellaneous income is affected.

Which of the following statements is true with respect to due professional care?

• An internal auditor should perform detailed tests of all transactions before communicating results.
• An item should not be mentioned in an engagement communication unless the internal auditor is absolutely certain of the item.
• An engagement communication should never be viewed as providing an infallible truth about a subject.
• An internal auditor has no responsibility to recommend improvements.

Due professional care implies reasonable care and competence, not infallibility or extraordinary performance. Thus, which of the following is unnecessary?

• The conduct of examinations and verifications to a reasonable extent.
• The conduct of extensive examinations.
• The reasonable assurance that compliance does exist.
• The consideration of the possibility of material irregularities.

The internal audit activity can perform an important role in preventing and detecting significant fraud by being assigned all but which one of the following tasks?

• Review large, abnormal, or unexplained expenditures.
• Review sensitive expenses, such as legal fees, consultant fees, and foreign sales commissions.
• Review every control feature pertaining to petty cash receipts.
• Review contributions by the organization that appear to be unusual.

To ensure that due professional care has been taken at all times during an engagement, the internal auditor should always

• Ensure that all financial information related to the audit is included in the audit plan and examined for nonconformance or irregularities.
• Ensure that all audit tests are fully documented.
• Consider the possibility of nonconformance or irregularities at all times during an engagement.
• Communicate any noncompliance or irregularity discovered during an engagement promptly to the audit committee.