WorksheetsGroup 1 - Internal Audit
Total questions: 50
Worksheet time: 24mins
Which of the following are components of the definition of internal auditing?
Independence and Objectivity
A systematic and disciplined approach
Helping the organization accomplish its objectives
All of the above
What is an internal audit?
Check the company's finances.
Check the company's internal control system.
Check the company's tax.
Check the company's production process.
What is the main purpose of an internal audit?
Identify errors and frauds.
Ensure compliance with legal regulations.
Evaluate the effectiveness and efficiency of the internal control system.
Both a) and c).
What stages does the internal audit process include
Planning, implementing, and reporting.
Planning, conducting, and evaluating.
Planning, implementation, and evaluation
Planning, implementation, and analysis.
What skills does the internal audit team need?
Knowledge of internal audit and control.
Communication and analytical skills.
Leadership and project management skills.
Both a), b), and c).
Internal audit is usually performed by whom in the company?
Internal auditors.
Financial staff.
Senior management staff.
Both a), b), and c).
The internal audit process includes data collection, analysis, and evaluation. What is the analysis phase?
Identify risks and weaknesses.
Compare actual data with the standard.
Evaluate the effectiveness and efficiency of the internal control system.
Identify remedial measures.
The internal audit process includes data collection, analysis, and evaluation. What is the evaluation phase?
Identify risks and weaknesses.
Compare actual data with the standard.
Evaluate the effectiveness and efficiency of the internal control system.
Identify remedial measures.
How many times per year are internal audits usually performed?
One time
Twice
Three time
Subject to company regulations
What is not a benefit of internal audit?
Fraud detection and prevention.
Ensure compliance with legal regulations.
Improve the efficiency and effectiveness of the internal control system.
Strengthen the power of internal audit staff.
What type of organization can internal audit apply to?
Private company
Joint Stock Company
Non-profit organization
All types of organizations above
What issues can internal audits detect?
Financial fraud
Errors in the internal control system
Error in accounting process
All of the above
The steps of the internal audit process may vary according to the requirements of the company.
Correct
Wrong
Does internal audit only apply to companies with large resources and large-scale operations?
Correct
Wrong
Internal audit only examines financial statements and is not related to the company's other activities.
Correct
Wrong
Can internal audit help a company strengthen internal control and reduce risk?
Correct
Wrong
In the process of internal audit, what principles must internal auditors adhere to?
Independent, Professional, Respectful, Confidential
Dedicated, honest, friendly, flexible
Agile, flexible, careful, responsible
Accurate, agile, professional, dedicated
Choose the best sentence
An Internal audit was born from the needs of the unit manager
Internal audit is associated with management's perception of control issues
Sentences a and b
Doesn't have a suitable answer
Association of Internal Auditors (IIA) was established in
Boston
Washington
New York
Italy
Which of the following is NOT suitable for internal audit?
An Internal audit has relative independence
Independent audit with a fee, internal audit without fee
Independent audit conducted after the end of the year, an internal audit conducted whenever necessary
Internal audit results are more reliable than the independent audit
Which of the following are components of the definition of internal auditing?
Independence and Objectivity
A systematic and disciplined approach
Helping the organization accomplish its objectives
All of the above
Within the context of internal auditing, assurance services are best defined as:
objective examinations of evidence for the purpose of providing independent assessments.
advisory service intended to add value and improve an organization's operations.
professional activities that measure and communicate financial and business data.
objective evaluations of compliance with policies, plans, procedures, laws andregulations
Which of the following best describes the purpose of the internal audit activity?
To add value and improve an organization's operations.
To assist management with the design and implementation of risk management and control systems.
To examine and evaluate an organization's accounting system as a service to management.
To monitor the organization's internal control system for the external auditors.
The objective of an internal audit is
To prevent error and fraud.
To detect error and fraud.
To improve financial control.
All of the above.
Audit of accounts by the staff of the business is known as:
Statutory Audit.
Internal Audit.
Interim Audit.
Continuous Audit.
In the planning phase, the scope of an internal audit engagement is defined by the
Engagement work program.
Preliminary survey.
Engagement objectives.
Scheduling and time estimates.
Internal auditing is considered to be part of an organization's:
Accounting system.
Control activities.
Monitoring.
External controls.
Which one of the following best describes the term 'operational audit'?
Any audit performed by the internal auditor
An audit of the operational processes of the organization
An audit performed by the operations director
A statutory audit
All of the following are acceptable criteria on which an internal audit may be based except
Standards or guidelines.
Policies and procedures.
Management cooperation with audit activities.
Control frameworks.
Documentation required to plan an internal audit engagement includes information that
Resources needed to complete the engagement were considered.
Intended engagement observations have been identified.
Internal audit activity resources are efficiently and effectively employed.
Planned engagement work will be completed on a timely basis.
Which of the following statements is true concerning a time budget for an internal audit engagement?
Time budgets should be used for financial audits, but not for operational audits.
Time budgets should be strictly adhered to, regardless of circumstances
Requests for time budget adjustments should be approved by the audit committee.
Time budgets should normally be prepared in terms of hours or days.
One of the primary roles of an engagement work program is to
Provide a standardized approach to the engagement.
Document an internal auditor's evaluations of controls.
Assess the risks associated with the activity under review.
Serve as a tool for planning and conducting engagement work.
An audit in accordance with the Single Audit Act does not involve reporting upon:
Compliance with provisions of laws that may have a direct and material effect on each major federal financial assistance program.
Financial statements.
Internal control over operations.
Schedule of expenditures of federal awards.
The organization that issues standards for the practice of internal auditing is the:
American Accounting Association.
American Institute of Certified Public Accountants.
American Organization of Internal Auditing.
Institute of Internal Auditors.
Which of the following best describes the scope of internal auditing as it has developed to date?
Internal auditing involves appraising the economy and efficiency with which resources are employed.
Internal auditing involves evaluating compliance with policies, plans, procedures, laws, and regulations.
Internal auditing has evolved to verify the existence of assets and review the means of safeguarding assets.
Internal auditing has evolved to more of an operational orientation from a financial orientation.
Interviewing operating personnel, identifying the objectives of the auditee, identifying standards used to evaluate performance, and assessing the risk inherent in the auditee's operations are activities typically performed in which phase of an internal audit?
The fieldwork phase.
The preliminary survey phase.
The audit programming phase.
The reporting phase.
The scope of an internal audit is initially defined by the:
Audit objectives.
Scheduling and time estimates.
Preliminary survey.
Audit program.
The internal auditing department provides information about control and quality of performance to:
Management and the board of directors
A level in the organization sufficient to ensure acceptance of all recommendations
Outside agencies for regulatory and financial compliance
Any member of the organization upon request
Management is beginning to take corrective action on human resources department deficiencies reported during the last internal audit. According to the IIA's Standards, the internal auditor should:
Oversee the corrective action.
Postpone the next audit of the human resources department until the corrective action is completed.
Refrain from judging whether the corrective action will remedy the deficiencies.
Follow up to see that the corrective action satisfies the audit recommendations.
According to the IIA's Standards, an internal auditor's working papers should be reviewed by the:
Management of the department being audited.
Management of the internal auditing department.
Audit committee of the board of directors.
Management of the organization's security division.
For the highest degree of independence, the director of internal auditing should report directly to:
The controller
The audit committee of the board of directors.
The executive vice president.
The chief accountant.
Which of the following is not one of the attribute standards of the IIA's Standards for the Professional Practice of Internal Auditing?
Independence and objectivity.
Integrity and skepticism.
Proficiency and professional care.
Purpose, authority, and responsibility.
Per IIA Standards, internal audit functions must establish:
Internal quality assurance and improvements program assessments
External quality assurance and improvements program assessments
Both internal and external quality assurance and improvement program assessments
Neither internal nor external quality assurance and improvements program assessments
Who is ultimately responsible for determining that the objectives for an internal audit engagement have been met?
To emphasize the importance of the internal audit function to the organization
To make recommendations to improve the strategic plan.
To ensure that the internal audit plan supports the overall business objectives.
To provide assurance that the strategic plan is consistent with the organization's values.
Which of the following is the best reason for the CAE to consider the organization's strategic plan in developing the annual internal audit plan?
To emphasize the importance of the internal audit function to the organization.
To make recommendations to improve the strategic plan
To ensure that the internal audit plan supports the overall business objectives.
To provide assurance that the strategic plan is consistent with the organization's values.
The Standards require policies and procedures to guide the internal audit staff. Which of the following statements is false concerning this requirement?
A small internal audit function may be managed informally through close supervision and written memos.
Formal administrative and technical audit manuals may not be needed by all internal audit functions.
The CAE should establish the function's policies and procedures.
All internal audit functions should have detailed policies and procedures manual
Which of the following is not a responsibility of the CAE?
To establish a risk-based plan to accomplish the objectives of the internal auditing activity consistent with the organization's goals
To communicate the internal audit function's plans and resource requirements to senior management and the board for review and approval
To oversee the establishment, administration, and assessment of the organization's system of internal controls and risk management processes
To follow up on whether appropriate management actions have been taken on significant reported risks
When evaluating the independence of internal audit activity, a quality assurance review team performing an external assessment considers several factors. Which of the following factors has the least amount of influence when judging an internal audit activity's independence?
The extent of internal auditor training in communications skills.
Relationship between engagement records and engagement communications.
Criteria used in making internal auditors' assignments.
Impartial and unbiased judgments
Which of the following activities is not presumed to impair the objectivity of an internal auditor?
I. Recommending standards of control for a new information system application.
II. Drafting procedures for running a new computer application to ensure that proper controls are installed.
III. Performing reviews of procedures for a new computer application before it is installed.
I only.
I and III.
III only.
II only.
An external quality assessment team was evaluating the independence of internal audit activity. The internal audit activity performs engagements concerning all of the elements included in its scope. Which of the following reporting responsibilities is most likely to threaten the internal audit activity's independence?
Reporting to the Executive vice president.
Reporting to the President.
Reporting to the Audit committee.
Reporting to the treasurer.
