WorksheetsPart 1 SU 1.8
Total questions: 10
Worksheet time: 20mins
The board of an organization has charged the chief audit executive (CAE) with upgrading the internal audit activity. The CAE’s first task is to develop a charter. What item should be included in the statement of objectives?
Report all engagement results to the board every quarter.
Notify governmental regulatory agencies of unethical business practices by organization management.
Evaluate the adequacy and effectiveness of the organization’s controls
Submit budget variance reports to management every month
Internal auditing has planned an engagement to evaluate the effectiveness of the quality assurance function as it affects the receipt of goods, the transfer of the goods into production, and the scrap costs related to defective items. The engagement client argues that such an engagement is not within the scope of the internal audit activity and should come under the purview of the quality assurance department only. What is the most appropriate response?
Refer to the internal audit activity’s charter and the approved engagement plan that includes the area designated for evaluation in the current time period
Because quality assurance is a new function, seek the approval of management as a mediator to set the scope of the engagement
Indicate that the engagement will evaluate the function only in accordance with the standards set by, and approved by, the quality assurance function before beginning the engagement
Terminate the engagement because it will not be productive without the client’s cooperation
Which of the following is not true with regard to the internal audit charter?
It defines the authorities and responsibilities for the internal audit activity
It specifies the minimum resources needed for the internal audit activity.
It provides a basis for evaluating the internal audit activity.
It should be approved by the board.
After the chief audit executive receives approval from the board to offer consulting services, what should be done?
The CAE should begin performing consulting services.
The CAE should get approval from the internal auditors.
The internal audit charter should be amended.
The board should develop appropriate policies and procedures for conducting such engagements.
Which one of the following is not included in the internal audit charter?
Risk assessment of the internal audit activity.
Responsibility of the internal audit activity.
Purpose of the internal audit activity.
Authority of the internal audit activity.
The transportation department of a publicly held company has asked the internal audit activity to review the design specifications for a proposed new warehouse and repair facility. The best reason for the internal audit activity to decline the request is
Such a review does not fall within the authority granted in the internal audit charter.
The CEO and the head of the transportation department are neighbors and belong to the same social clubs.
The internal audit activity performed a thorough review of the transportation department the previous year.
The transportation department’s budget is immaterial to the organization’s total budget.
Which of the following is not appropriate for inclusion in the internal audit charter?
The nature of the chief audit executive’s functional reporting relationship with the board.
Authorization of internal audit access to records, personnel, and physical properties.
Definition of the scope of internal audit activities
Authorization of the board to approve the charter
Which of the following is an element of authority that should be included in the internal audit activity’s charter?
Access to the external auditors’ engagement records.
Samples of the types of disclosures that should be made to the audit committee.
Identification of the organizational units in which engagements are to be performed.
Access to records, personnel, and physical properties relevant to the performance of engagements.
To prevent misunderstandings, engagement clients must
Define the level of authority required by internal auditors for each engagement.
Authorize access to records, personnel, and physical properties relevant to the engagement
Be informed of the internal audit activity’s purpose, authority, and responsibility.
Establish the internal audit activity’s position within the organization
The internal audit charter includes all of the following except
A formal definition of the purpose, authority, and responsibility of the internal audit activity
The organization’s core values, mission, and vision statements
The nature of the chief audit executive’s relationship with the board.
The internal auditor’s responsibility to provide assurance and consulting services
