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WorksheetsChapter 5
Total questions: 15
Worksheet time: 8mins
In assessing organizational risk in a manufacturing organization, which of the following would have the greatest long-range impact on the organization?
Advertising budget.
Production scheduling.
Inventory policy.
Product quality.
Internal auditors often prepare process maps and reference portions of these maps to narrative descriptions of certain activities. This is an appropriate procedure to:
Determine the ability of the activities to produce reliable information.
Obtain the understanding necessary to test the process.
Document that the process meets internal audit standards.
Determine whether the process meets established management objectives.
What is a business process?
How management plans to achieve the organization’s objectives.
The set of connected activities linked with each other for the purpose of achieving an objective or goal.
A group of interacting, interrelated, or interdependent elements forming a complex whole.
A finite endeavor (having specific start and completion dates) undertaken to create a unique product or service that brings about beneficial change or added value.
If a risk appears in the bottom right of quadrant II in the above risk control map, it means that:
There is an appropriate balance between risk and control.
The controls may be excessive relative to the risk.
The controls may be inadequate relative to the risk.
There is not enough information to make a judgment.
If a risk appears in the middle of quadrant IV in the above risk control map, it means that:
There is an appropriate balance between risk and control.
The controls may be excessive relative to the risk.
The controls may be inadequate relative to the risk.
There is not enough information to make a judgment.
Which of the following circumstances would concern the internal auditor the most?
A risk in the lower left corner of quadrant I.
A risk in the lower right corner of quadrant II.
A risk in the upper left corner of quadrant III.
A risk in the upper right corner of quadrant IV.
Which of the following are business processes?
I. Strategic planning.
II. Review and write-off of delinquent loans.
III. Safeguarding of assets.
IV. Remittance of payroll taxes to the respective tax authorities
I and III.
II and IV.
I, II, and IV.
I, II, III, and IV.
Which of the following symbols in a process map will most likely contain a question?
Rectangle.
Diamond.
Arrow.
Oval.
After business risks have been identified, they should be assessed in terms of their inherent:
Impact and likelihood.
Likelihood and probability.
Significance and severity.
Significance and control effectiveness.
In a risk by process matrix, a process that helps to manage a risk indirectly would be shown to have:
A key link.
A secondary link.
An indirect link.
No link at all.
A major upgrade to an important information system would most likely represent a high:
External risk factor.
Internal risk factor.
Other risk factor.
Likelihood of future systems problems.
Which of the following is true regarding business process outsourcing?
Outsourcing a core, high-risk business process reduces the overall operational risk.
Outsourced processes should not be included in the internal audit universe.
The independent outside auditor is required to review all significant outsourced business processes.
Management’s controls to ensure the outsourcing provider meets contractual performance requirements should be tested by the internal audit function.
A company has recently outsourced its payroll process to a third-party service provider. An audit team was scheduled to audit payroll controls in the annual audit plan prepared prior to the outsourcing. What action should the audit team take, considering the outsourcing decision?
Cancel the engagement, because the processing is being performed outside the organization.
Review only the controls over payments to the third-party provider based on the contract.
Review only the company’s controls over data sent to and received from the third-party service provider.
Review the controls over payroll processing in both the company and the third-party service provider.
Which flowcharting symbol indicates the start or end of a process?
Arrow.
Diamond
Oval.
Rectangle.
How does a control manage a specific risk?
It reduces the likelihood of the event giving rise to the risk.
It reduces the impact of the event giving rise to the risk.
It reduces either likelihood or impact or both.
It prevents the occurrence of the event.
