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WorksheetsPROGRESS CHECK CIA UNIT 1 & 2 PT PLN (Persero)
Total questions: 40
Worksheet time: 3600secs
Name
Class
Date
1.
The nature and scope of an assurance engagement are determined by the
a)
Board
b)
Internal auditor.
c)
Senior management.
d)
Engagement client.
2.
Which of the following best defines consulting services?
a)
The policies, procedures, and activities designed and operated to ensure that risks are contained within the level that an organization is willing to accept.
b)
A systematic, disciplined approach to evaluate and improve the effectiveness of governance, risk management, and control processes.
c)
The objective examination of evidence for the purpose of providing an independent assessment on governance, risk management, and control processes for the organization.
d)
Activities intended to add value and improve an organization’s governance, risk management, and control processes.
3.
All of the following activities would be considered consulting services except
a)
The CFO has requested internal audit to provide an estimation of the savings from outsourcing the payroll processing function.
b)
The director has engaged internal audit to review and recommend improvements for the adequacy of cash controls at an offsite selling location.
c)
The board has requested internal audit to provide an opinion on management’s claim that the segment was profitable in the first quarter.
d)
Internal audit has been engaged to train employees on the new accounts receivable system.
4.
In complying with The IIA’s Code of Ethics, an internal auditor should
a)
Use individual judgment in the application of the principles set forth in the Code.
b)
Respect and contribute to the objectives of the organization even if it is engaged in illegal activities.
c)
Go beyond the limitation of personal technical skills to advance the interest of the organization.0
d)
Primarily apply the competency principle in establishing trust
5.
An internal auditor who encounters an ethical dilemma not explicitly addressed by The IIA’s Code of Ethics should always
a)
Seek counsel from an independent attorney to determine the personal consequences of potential actions.
b)
Take action consistent with the principles embodied in The IIA’s Code of Ethics.
c)
Seek the counsel of the audit committee before deciding on an action.
d)
Act consistently with the employing organization’s code of ethics even if such action would not be consistent with The IIA’s Code of Ethics.
6.
The IIA Rules of Conduct set forth in The IIA’s Code of Ethics
a)
Describe behavior norms expected of internal auditors.
b)
Are guidelines to assist internal auditors in dealing with engagement clients.
c)
Are interpreted by the Principles.
d)
Apply only to particular conduct specifically mentioned.
7.
An internal auditor who omits material unsatisfactory conclusions from a report most likely violates which principle of The IIA Code of Ethics?
a)
Confidentiality
b)
Competency
c)
Objectivity
d)
Integrity
8.
An internal auditor who uses the CIA designation after it has expired most likely is engaging in an act discreditable under which principle of The IIA’s Code of Ethics?
a)
Confidentiality.
b)
Competency
c)
Integrity
d)
Objectivity
9.
In The IIA’s Code of Ethics, Rules of Conduct are an aid to interpreting the four principles. Which principle most likely is interpreted by the Rule of Conduct that addresses performance of work with diligence?
a)
Competency
b)
Objectivity.
c)
Integrity
d)
Confidentiality
10.
Which of the following situations is a violation of The IIA’s Code of Ethics?
a)
An internal auditor, with the knowledge and consent of management, accepted a token gift from a customer of the organization that was not presumed to impair and did not impair judgment.
b)
Knowing that management was aware of the situation, an internal auditor purposely left a description of an unlawful practice out of the final engagement communication.
c)
An internal auditor shared techniques with internal auditors from another organization.
d)
Based upon knowledge of the probable success of the employer’s business, an internal auditor invested in a mutual fund that specialized in the same industry.
11.
Which of the following concurrent occupations could appear to subvert the ethical behavior of an internal auditor?
a)
Internal auditor and a well-known charitable organization’s local in-house chairperson.
b)
Internal auditor and part-time business insurance broker.
c)
Internal auditor and adjunct faculty member of a local business college that educates potential employees.
d)
Internal auditor and landlord of multiple housing that publicly advertises for tenants in a local community newspaper listing monthly rental fees.
12.
Which of the following activities of an internal auditor is most likely to be acceptable under The IIA’s Code of Ethics?
a)
Late arrivals and early departures from work because this practice is common in the organization.
b)
Frequent luncheons and other socializing with major suppliers of the organization without the consent of senior management.
c)
Conducting an unrelated business outside of office hours.
d)
Acceptance of a material gift from a supplier.
13.
Which of the following violates the confidentiality principle in The IIA’s Code of Ethics?
a)
Making only those disclosures permitted by the organization.
b)
Releasing information externally without review by designated persons.
c)
Documenting the rationale for allocating resources to the internal audit activity but not the internal audit plan.
d)
Assessing the quality assurance and improvement plan.
14.
To comply with the confidentiality principle in The IIA’s Code of Ethics, internal auditors should
a)
Use data encryption and restrict email distribution.
b)
Not permit other auditors to issue false reports.
c)
Solicit feedback from internal audit stakeholders.
d)
Omit observations from engagement reports.
15.
Internal auditors specifically demonstrate conformance with the confidentiality principle by
a)
Obtaining new certifications and continuing professional education.
b)
Disclosing all material facts to avoid distortion of reporting.
c)
Documenting distribution restrictions on engagement records.
d)
Performing internal audit reviews in accordance with the Standards.
16.
Under The IIA’s Code of Ethics, an entity that provides internal auditing services is specifically required to
a)
Maintain certain predetermined staffing requirements for engagements.
b)
Comply with the International Standards for the Professional Practice of Internal Auditing.
c)
Comply with organizational policy.
d)
Participate in a formal continuing education program.
17.
A new staff internal auditor was told to perform an engagement in an area with which the internal auditor was not familiar. Because of time constraints, no supervision was provided. The assignment represented a good learning experience, but the area was clearly beyond the internal auditor’s competence. Nonetheless, the internal auditor prepared comprehensive working papers and communicated the results to management. In this situation,
a)
The internal audit activity violated the Standards by hiring an internal auditor without proficiency in the area.
b)
The internal audit activity violated the Standards by not providing adequate supervision.
c)
The chief audit executive has not violated The IIA’s Code of Ethics because it does not address supervision.
d)
The Standards and The IIA’s Code of Ethics were followed by the internal audit activity.
18.
Which of the following most likely constitutes a violation of The IIA’s Code of Ethics?
a)
Auditor A has accepted an assignment to perform an engagement at the electronics manufacturing division. Auditor A has recently joined the internal audit activity. But Auditor A was senior auditor for the external audit of that division and has audited many electronics organizations during the past 2 years.
b)
Auditor B has been assigned to perform an engagement at the warehousing function 6 months from now. Auditor B has no expertise in that area but accepted the assignment anyway. Auditor B has signed up for continuing professional education courses in warehousing that will be completed before the assignment begins.
c)
Auditor C is content as an internal auditor and has come to look at it as a regular 9-to-5 job. Auditor C has not engaged in continuing professional education or other activities to improve effectiveness during the last 3 years. However, Auditor C feels performance of quality work is the same as before.
d)
Auditor D discovered an internal financial fraud during the year. The books were adjusted to properly reflect the loss associated with the fraud. Auditor D discussed the fraud with the external auditor when the external auditor reviewed working papers detailing the incident.
19.
The authority of the internal audit activity is limited to that granted by
a)
The board and the controller.
b)
Senior management and the Standards.
c)
Management and the board.
d)
The board and the chief financial officer.
20.
The chief audit executive (CAE) is best defined as the
a)
Inspector general.
b)
Person responsible for the internal audit function.
c)
Outside provider of internal audit services.
d)
Person responsible for overseeing the contract with the outside provider of internal audit services.
21.
To determine the organizational placement of internal audit, the CAE
1.Works with the board
2.Works with senior management
3.Has discretion to independently determine placement
a)
1 only.
b)
2 only.
c)
1 and 2 only.
d)
3 only.
22.
The CAE should report functionally to the board. The board is responsible for which of the following activities?
1. Internal communication and information flows
2. Approval of the internal audit risk assessment and related audit plan
3. Approval of annual compensation and salary adjustments for the CAE
a)
1 and 2 only.
b)
2 and 3 only.
c)
1 and 3 only.
d)
1, 2, and 3.
23.
The optimal administrative reporting line of the CAE is to
a)
The audit committee.
b)
Line management.
c)
Board of directors.
d)
CEO or equivalent.
24.
Independence permits internal auditors to render impartial and unbiased judgments. The best way to achieve independence is through
a)
Individual knowledge and skills.
b)
A dual-reporting relationship.
c)
Supervision within the organization.
d)
Organizational knowledge and skills.
25.
Prior to implementation, management has requested the internal audit activity to perform an engagement to recommend procedures and policies for improving management control over the telephone marketing operations of a major division. The chief audit executive should
a)
Not accept the engagement because recommending controls would impair future objectivity regarding this operation.
b)
Not accept the engagement because internal audit activities are presumed to have expertise regarding accounting controls, not marketing controls.
c)
Accept the engagement, but indicate to management that, because recommending controls impairs independence, future engagements in the area will be impaired.
d)
Accept the engagement because objectivity will not be impaired.
26.
Assessing individual objectivity of internal auditors is the responsibility of
a)
The chief executive officer.
b)
The board.
c)
The audit committee.
d)
The chief audit executive.
27.
The CAE bears the responsibility to do which of the following?
a)
Assess the level of independence of the board.
b)
Assess the level of knowledge, skills, and competencies of the chief financial officer.
c)
Foster collective objectivity.
d)
Foster individual objectivity.
28.
Which of the following actions is required of the CAE in regard to the objectivity of internal auditors?
a)
Maximize.
b)
Prioritize.
c)
Minimize.
d)
Assess.
29.
When faced with an imposed scope limitation, the chief audit executive needs to
a)
Refuse to perform the engagement until the scope limitation is removed.
b)
Communicate the potential effects of the scope limitation to the board.
c)
Increase the frequency of engagements concerning the activity in question.
d)
Assign more experienced personnel to the engagement.
30.
The internal auditors must be able to distinguish carefully between a scope limitation and other limitations. Which of the following is not considered a scope limitation?
a)
The divisional management of an engagement client has indicated that the division is in the process of converting a major computer system and has indicated that the information systems portion of the planned engagement will have to be postponed until next year.
b)
The board reviews the engagement work schedule for the year and deletes an engagement that the chief audit executive thought was important to conduct.
c)
The engagement client has indicated that certain customers cannot be contacted because the organization is in the process of negotiating a long-term contract with the customers and they do not want to upset the customers.
d)
None of the answers are correct.
31.
During the course of an engagement, an internal auditor makes a preliminary determination that a major division has been inappropriately capitalizing research and development expense. The engagement is not yet completed, and the internal auditor has not documented the problem or determined that it really is a problem. However, the internal auditor is informed that the chief audit executive has received the following communication from the president of the organization:
“The controller of Division B informs me that you have discovered a questionable account classification dealing with research and development expense. We are aware of the issue. You are directed to discontinue any further investigation of this matter until informed by me to proceed. Under the confidentiality standard of your profession, I also direct you not to communicate with the outside auditors regarding this issue.”
Which of the following is an appropriate action for the CAE to take regarding the questionable item?
a)
Immediately report the communication to The IIA and ask for an ethical interpretation and guidance.
b)
Inform the president that this scope limitation will need to be reported to the board.
c)
Continue to investigate the area until all the facts are determined and document all the relevant facts in the engagement records.
d)
Immediately notify the external auditors of the problem to avoid aiding and abetting a potential crime by the organization.
32.
An internal auditor who had been supervisor of the accounts payable section should not perform an assurance review of that section
a)
Because a reasonable period of time in which to establish independence cannot be determined.
b)
Until at least 1 year has elapsed.
c)
Until after the next annual review by the external auditors.
d)
Until it is clear that the new supervisor has assumed the responsibilities.
33.
When hiring entry-level internal auditing staff, which of the following will most likely predict the applicant’s success as an internal auditor?
a)
Grade point average on college accounting courses.
b)
Ability to fit well socially into a group.
c)
Ability to organize and express thoughts well.
d)
Level of detailed knowledge of the organization.
34.
A chief audit executive (CAE) for a very small internal audit department has just received a request from management to perform an audit of an extremely complex area in which the CAE and the department have no expertise. The nature of the audit engagement is within the scope of internal audit activities. Management has expressed a desire to have the engagement conducted in the very near future because of the high level of risk involved. Which of the following responses by the CAE would be in violation of the Standards?
a)
Discuss with management the possibility of outsourcing the audit of this complex area.
b)
Add an outside consultant to the audit staff to assist in the performance of the audit engagement.
c)
Accept the audit engagement and begin immediately, since it is a high-risk area.
d)
Discuss the timeline of the audit engagement with management to determine if sufficient time exists in which to develop appropriate expertise.
35.
Your organization has selected you to develop an internal audit activity. Your approach will most likely be to hire
a)
Internal auditors, each of whom possesses all the skills required to handle all engagements.
b)
Inexperienced personnel and train them the way the organization wants them trained.
c)
Degreed accountants because most internal audit work is accounting related.
d)
Internal auditors who collectively have the knowledge and skills needed to perform the responsibilities of the internal audit activity.
36.
The internal audit activity collectively must possess or obtain certain competencies. Internal audit staff should be competent in
a)
The use of the International Professional Practices Framework.
b)
Finance.
c)
General management principles.
d)
Marketing.
37.
Which one of the following is responsible for determining the appropriate levels of education and experience needed for the internal audit staff?
a)
Human resource manager.
b)
Chief audit executive.
c)
Chief executive officer.
d)
Chief financial officer.
38.
How often should the skills of the internal audit staff be assessed?
a)
Periodically.
b)
Every 5 years.
c)
When requested by management.
d)
Semi-annually.
39.
All of the following will help the CAE identify the available knowledge, skills, and competencies of the internal audit staff except
a)
Hiring practices.
b)
Periodic skills assessment.
c)
External service provider.
d)
Staff performance appraisals.
40.
Use of external service providers with expertise in healthcare benefits is appropriate when the internal audit activity is
a)
Evaluating the organization’s estimate of its liability for postretirement benefits, which include healthcare benefits.
b)
Comparing the cost of the organization’s healthcare program with other programs offered in the industry.
c)
Training its staff to conduct an audit of healthcare costs in a major division of the organization.
d)
All of the answers are correct.
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