Internal audit

What is the primary objective of an internal audit function within an organization?

• Ensuring compliance with external regulations
• Providing assurance on the effectiveness of internal controls
• Maximizing profits for shareholders
• Implementing strategic initiatives for growth

Answer explanation

Providing assurance on the effectiveness of internal controls

Which of the following is NOT typically a responsibility of an internal audit function?

• Conducting financial statement audits
• Evaluating the efficiency of business processes
• Identifying and assessing risks to the organization
• Monitoring compliance with company policies and procedures

Answer explanation

Conducting financial statement audits

Which of the following is an advantage of outsourcing the internal audit function?

• Better alignment with organizational objectives
• Enhanced independence and objectivity
• Reduced costs and access to specialized expertise
• Increased control over audit processes

Answer explanation

Reduced costs and access to specialized expertise

What is the primary purpose of an internal audit charter?

• Establishing the qualifications of internal auditors
• Defining the scope and authority of the internal audit function
• Determining the audit frequency for different departments
• Allocating budget resources for audit activities

Answer explanation

Defining the scope and authority of the internal audit function

Which of the following statements best describes the concept of "independence" in internal auditing?

• The internal audit function reports directly to the CEO
• Internal auditors are free from undue influence or conflicts of interest
• Internal auditors work closely with external auditors
• The internal audit department has its own budgetary authority

Answer explanation

Internal auditors are free from undue influence or conflicts of interest

What is the purpose of a risk-based internal audit approach?

• To minimize the involvement of auditors in high-risk areas
• To focus audit resources on areas of greatest significance to the organization
• To increase the frequency of audits in low-risk areas
• To standardize audit procedures across all departments

Answer explanation

To focus audit resources on areas of greatest significance to the organization

Which of the following is NOT a phase of the internal audit process?

• Planning
• Reporting
• Execution
• Implementation

Answer explanation

Implementation

What is the primary purpose of a follow-up audit?

• To identify new risks and opportunities for improvement
• To verify the implementation of corrective actions resulting from previous audits
• To assess the performance of the internal audit function
• To evaluate the effectiveness of internal controls

Answer explanation

To verify the implementation of corrective actions resulting from previous audits

Which of the following is an example of a preventive control that may be assessed by internal auditors?

• Security cameras monitoring employee activities
• Reconciliation of bank statements by management
• Segregation of duties between authorization, custody, and record keeping
• Employee training programs on ethical behavior

Answer explanation

Segregation of duties between authorization, custody, and record keeping

What is the primary purpose of continuous auditing?

• To conduct audits on a periodic basis
• To streamline the audit process through automation
• To focus audit efforts on high-risk areas
• To provide real-time assurance on the effectiveness of controls

Answer explanation

To provide real-time assurance on the effectiveness of controls