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WorksheetsPROGRESS CHECK CIA UNIT 3 & 4 PT PLN (Persero)
Total questions: 40
Worksheet time: 3600secs
Name
Class
Date
1.
An internal auditor observes that a receivables clerk has physical access to and control ofcash receipts. The auditor worked with the clerk several years before and has a high level of trust in the individual. Accordingly, the auditor notes in the engagement working papers that controls over receipts are adequate. Has the auditor exercised due professional care?
a)
Yes, reasonable care has been taken.
b)
No, irregularities were not noted.
c)
No, alertness to conditions most likely indicative of irregularities was not shown.
d)
Yes, the engagement working papers were annotated.
2.
A certified internal auditor performed an assurance engagement to review a department store’s cash function. Which of the following actions will be deemed lacking in due professional care?
a)
Organizational records were reviewed to determine whether all employees who handle cash receipts and disbursements were bonded.
b)
A flowchart of the entire cash function was developed, but only a sample of transactions was tested.
c)
The final engagement communication included a well-supported recommendation for the reduction in staff, although it was known that such a reduction would adversely affect morale.
d)
Because of a highly developed system of internal control over the cash function, the final engagement communication assured senior management that no irregularities existed.
3.
With regard to the exercise of due professional care, an internal auditor should
a)
Consider the relative materiality or significance of matters to which assurance procedures are applied.
b)
Emphasize the potential benefits of an engagement without regard to the cost.
c)
Consider whether criteria have been established to determine whether goals are achieved, not whether those criteria are adequate.
d)
Select procedures that are likely to provide absolute assurance that irregularities do not exist.
4.
Due professional care calls for
a)
Detailed reviews of all transactions related to a particular function.
b)
Infallibility and extraordinary performance when the system of internal control is known to be weak.
c)
Consideration of the possibility of material irregularities during every engagement.
d)
Testing in sufficient detail to give absolute assurance that noncompliance does not exist.
5.
Internal auditors are responsible for continuing their education to maintain their proficiency. Which of the following is true regarding the continuing education requirements of the practicing internal auditor?
a)
Practicing certified internal auditors are required to obtain 40 hours of continuing professional education every 2 years.
b)
CIAs have formal requirements that must be met in order to continue as CIAs.
c)
Attendance, as an officer or committee member, at formal IIA meetings does not meet the criteria of continuing professional development.
d)
In-house programs meet continuing professional education requirements only if they have preapproval by The IIA.
6.
An internal auditor judged an item to be immaterial when planning an assurance engagement. However, the assurance engagement may still include the item if it is subsequently determined that
a)
Sufficient staff is available.
b)
Adverse effects related to the item are likely to occur.
c)
Related information is reliable.
d)
Miscellaneous income is affected.
7.
Which of the following statements is true with respect to due professional care?
a)
An internal auditor should perform detailed tests of all transactions before communicating results.
b)
An item should not be mentioned in an engagement communication unless the internal auditor is absolutely certain of the item.
c)
An engagement communication should never be viewed as providing an infallible truth about a subject.
d)
An internal auditor has no responsibility to recommend improvements.
8.
Due professional care implies reasonable care and competence, not infallibility or extraordinary performance. Thus, which of the following is unnecessary?
a)
The conduct of examinations and verifications to a reasonable extent.
b)
The conduct of extensive examinations.
c)
The reasonable assurance that compliance does exist.
d)
The consideration of the possibility of material irregularities.
9.
The internal audit activity can perform an important role in preventing and detecting significant fraud by being assigned all but which one of the following tasks?
a)
Review large, abnormal, or unexplained expenditures.
b)
Review sensitive expenses, such as legal fees, consultant fees, and foreign sales commissions.
c)
Review every control feature pertaining to petty cash receipts.
d)
Review contributions by the organization that appear to be unusual.
10.
To ensure that due professional care has been taken at all times during an engagement, the internal auditor should always
a)
Ensure that all financial information related to the audit is included in the audit plan and examined for nonconformance or irregularities.
b)
Ensure that all audit tests are fully documented.
c)
Consider the possibility of nonconformance or irregularities at all times during an engagement.
d)
Communicate any noncompliance or irregularity discovered during an engagement promptly to the audit committee.
11.
Fact Pattern: A staff internal auditor performed a portion of an engagement to review an organization’s marketing function. In particular, the internal auditor evaluated the function’s effective and efficient use of resources to identify. 1. Underused facilities, 2. Overstaffing or understaffing, 3. Nonproductive work, 4. Procedures that were not cost justified
To test for underused facilities, the internal auditor performed a complete walk-through of all spaces assigned to the marketing function and evaluated the use of both space and capital equipment. The internal auditor analyzed reports on space usage for the last year and concluded that facilities were neither underused nor used at maximum capacity.
To test for overstaffing or understaffing, the internal auditor compared current staffing levels with a staffing analysis recently completed by an independent contractor. Because the staffing analysis used work standards and service demands to provide factual and reliable information on staffing requirements, the internal auditor was able to conclude that staffing levels were optimal.
To test for nonproductive work, the internal auditor interviewed an employee from each level and, based upon their responses, concluded that no significant amount of nonproductive work was being performed. Thus, the internal auditor concluded that additional engagement work to search for procedures that were not cost-justified would not be necessary.
In reference to requirements 1 and 2, due professional care
a)
Was exercised because the internal auditor applied reasonable care and competence in both areas.
b)
Was not exercised because the internal auditor failed to apply reasonable care regarding requirement 2.
c)
Was not exercised because the internal auditor failed to apply reasonable care regarding requirements 1 and 2.
d)
Was not exercised because the internal auditor failed to apply reasonable care regarding requirement 1.
12.
Fact Pattern: A staff internal auditor performed a portion of an engagement to review an organization’s marketing function. In particular, the internal auditor evaluated the function’s effective and efficient use of resources to identify. 1. Underused facilities, 2. Overstaffing or understaffing, 3. Nonproductive work, 4. Procedures that were not cost justified
To test for underused facilities, the internal auditor performed a complete walk-through of all spaces assigned to the marketing function and evaluated the use of both space and capital equipment. The internal auditor analyzed reports on space usage for the last year and concluded that facilities were neither underused nor used at maximum capacity.
To test for overstaffing or understaffing, the internal auditor compared current staffing levels with a staffing analysis recently completed by an independent contractor. Because the staffing analysis used work standards and service demands to provide factual and reliable information on staffing requirements, the internal auditor was able to conclude that staffing levels were optimal.
To test for nonproductive work, the internal auditor interviewed an employee from each level and, based upon their responses, concluded that no significant amount of nonproductive work was being performed. Thus, the internal auditor concluded that additional engagement work to search for procedures that were not cost-justified would not be necessary.
In reference to requirements 3 and 4, due professional care
a)
Was exercised because the internal auditor applied reasonable care and competence in both areas.
b)
Was not exercised because the internal auditor failed to apply reasonable care and competence regarding requirement 3.
c)
Was not exercised because the internal auditor failed to apply reasonable care and competence regarding both requirements 3 and 4.
d)
Was not exercised because the internal auditor failed to apply reasonable care and competence regarding requirement 4.
13.
In exercising due professional care, internal auditors must consider which of the following?1. The relative complexity, materiality, or significance of matters to which assurance procedures are applied, 2. The extent of assurance procedures necessary to ensure that all significant risks will be identified, 3. The probability of significant errors, irregularities, or noncompliance
a)
1 and 2 only.
b)
2 and 3 only.
c)
1 and 3 only.
d)
1, 2, and 3.
14.
Assurance engagements must be performed with proficiency and due professional care. Accordingly, the Standards require internal auditors to 1. Consider the probability of significant noncompliance, 2. Perform assurance procedures with due professional care so that all significant risks are identified, 3. Weigh the cost of assurance against the benefits
a)
1 and 2 only.
b)
1 and 3 only.
c)
2 and 3 only.
d)
1, 2, and 3.
15.
During a consulting engagement, an internal auditor should exercise due professional care by considering which of the following?1. Needs and expectations of engagement clients, 2. Relative complexity and extent of work needed, 3. Cost of the consulting engagement
a)
1 and 2.
b)
2 and 3.
c)
1 and 3.
d)
1, 2, and 3.
16.
An internal auditor must exercise due professional care in performing engagements. Due professional care includes
a)
Establishing direct communication between the chief audit executive and the board.
b)
Evaluating established operating standards and determining whether those standards are adequate.
c)
Accumulating sufficient information so that the internal auditor can give absolute assurance that irregularities do not exist.
d)
Establishing suitable criteria of education and experience for filling internal auditing positions.
17.
An internal auditor has some suspicion of, but no information about, potential misstatement of financial statements. The internal auditor fails to exercise due professional care by
a)
Identifying potential ways in which a misstatement could occur and ranking the items for investigation.
b)
Informing the engagement manager of the suspicions and asking for advice on how to proceed.
c)
Not testing for possible misstatement because the engagement work program had already been approved by engagement management.
d)
Expanding the engagement work program, without the engagement client’s approval, to address the highest ranked ways in which a misstatement may have occurred.
18.
Internal auditors who fail to maintain their proficiency through continuing education could be found to be in violation of
a)
The International Standards for the Professional Practice of Internal Auditing.
b)
The IIA’s Code of Ethics.
c)
Both the International Standards for the Professional Practice of Internal Auditing and The IIA’s Code of Ethics.
d)
None of the answers are correct.
19.
The chief audit executive should develop and maintain a quality assurance and improvement program that covers all aspects of the internal audit activity and continuously monitors its effectiveness. All of the following are included in a quality program except
a)
Annual appraisals of individual internal auditors’ performance.
b)
Periodic internal assessment.
c)
Supervision.
d)
Periodic external assessments.
20.
Assessment of a quality assurance and improvement program should include evaluation of all of the following except
a)
Adequacy of the oversight of the work of external auditors.
b)
Conformance with the Standards and Code of Ethics.
c)
Adequacy of the internal audit activity’s charter.
d)
Contribution to the organization’s governance processes.When internal auditors perform an assurance engagement, they consider
21.
The internal audit activity’s quality assurance and improvement program is the responsibility of
a)
External auditors.
b)
The chief audit executive.
c)
The board.
d)
The audit committee.
22.
What are the four key steps of the Deming Cycle?
a)
Perform, Design, Act, and Review.
b)
Examine, Act, Check, and Verify.
c)
Plan, Do, Check, and Act.
d)
Perform, Diagnose, Calculate, and Act.
23.
According to The IIA’s International Professional Practices Framework, when may a self-assessment be performed in lieu of a full external assessment?
a)
When the self-assessment has been validated by a qualified, independent, competent, and professional external assessor.
b)
When the internal audit activity has conducted an external assessment within the past 2 years.
c)
When ongoing monitoring of the internal audit activity has not identified any weaknesses or areas in need of improvement.
d)
A self-assessment may not be performed in lieu of a full external assessment of the internal audit activity’s conformance with the Standards.
24.
A quality assurance and improvement program of an internal audit activity provides reasonable assurance that internal auditing work is performed in accordance with its charter. Which of the following are designed to provide feedback on the effectiveness of an internal audit activity?1. Proper supervision, 2. Proper training, 3. Internal reviews, 4. External reviews
a)
1, 2, and 3 only.
b)
2, 3, and 4 only.
c)
1, 3, and 4 only.
d)
1, 2, 3, and 4.
25.
An individual became head of the internal audit activity of an organization 1 week ago. An engagement client has come to the person complaining vigorously that one of the internal auditors is taking up an excessive amount of client time on an engagement that seems to be lacking a clear purpose. In handling this conflict with a client, the person should consider
a)
Discounting what is said, but documenting the complaint.
b)
Whether existing procedures within the internal audit activity provide for proper planning and quality assurance.
c)
Presenting an immediate defense of the internal auditor based upon currently known facts.
d)
Promising the client that the internal auditor will finish the work within 1 week.
26.
An external assessment of an internal audit activity contains an expressed opinion. The opinion may apply
a)
Only to the internal audit activity’s conformance with the Standards.
b)
Only to the effectiveness of the internal auditing coverage.
c)
Only to the adequacy of internal control.
d)
To conformance with the Standards and an assessment for each standard.
27.
Ordinarily, those conducting internal quality program assessments report to
a)
The board.
b)
The chief audit executive.
c)
Senior management.
d)
The internal audit staff.
28.
Quality program assessments may be performed internally or externally. A distinguishing feature of an external assessment is its objective to
a)
Identify tasks that can be performed better.
b)
Determine whether internal audit services meet professional standards.
c)
Set forth the recommendations for improvement.
d)
Provide independent assurance.
29.
As a part of a quality program, internal assessment teams most likely will examine which of the following to evaluate the quality of engagement planning and documentation for individual engagements?
a)
Measures of project budgets and audit plan completion.
b)
Project assignment documentation.
c)
Weekly status reports.
d)
The long-range engagement work schedule.
30.
Periodic internal assessments of the internal audit activity primarily serve the needs of
a)
The board of directors.
b)
The internal audit activity’s staff.
c)
The chief audit executive (CAE).
d)
Senior management.
31.
External assessment of an internal audit activity is not likely to evaluate
a)
Adherence to the internal audit activity’s charter.
b)
Conformance with the Standards.
c)
Detailed cost-benefit analysis of the internal audit activity.
d)
The internal audit staff’s expertise.
32.
The interpretation related to quality assurance given by the Standards is that
a)
External assessments can provide senior management and the board with independent assurance about the quality of the internal audit activity.
b)
Appropriate follow-up to an external assessment is the responsibility of the chief audit executive’s immediate supervisor.
c)
The internal audit activity is primarily measured against The IIA’s Code of Ethics.
d)
Supervision is limited to the planning, examination, evaluation, communication, and follow-up process.
33.
Which of the following is not true of quality assessments that are implemented according to IIA guidance?
a)
The results of a quality assessment can be shared with senior management and the board.
b)
A quality assessment team would be expected to review the internal audit activity’s efficiency and effectiveness.
c)
Company managers or members of the board may be members of the external quality assessment team if they are qualified, since they are independent of the internal audit activity.
d)
The quality assessment process may include feedback from engagement clients through interviews and questionnaires or surveys.
34.
Which of the following is only part of an internal audit activity’s quality assurance program rather than being included as part of other responsibilities of the chief audit executive (CAE)?
a)
The CAE provides information about and access to internal audit working papers to the external auditors to enable them to understand and determine the degree to which they may rely on the internal auditors’ work.
b)
Management approves a formal charter establishing the purpose, authority, and responsibility of the internal audit activity.
c)
Each individual internal auditor’s performance is appraised at least annually.
d)
Supervision of an internal auditor’s work is performed throughout each audit engagement.
35.
At what minimal required frequency does the chief audit executive report the results of internal assessments in the form of ongoing monitoring to senior management and the board?
a)
Monthly.
b)
Quarterly.
c)
Annually.
d)
Biennially.
36.
Following an external assessment of the internal audit activity, who is (are) responsible for communicating the results to the board?
a)
Internal auditors.
b)
Audit committee.
c)
Chief audit executive.
d)
External auditors.
37.
Internal auditors may include in their audit report that their activities conform with The IIA Standards. They may use this statement only if
a)
It is supported by the results of the quality program.
b)
An independent external assessment of the internal audit activity is conducted annually.
c)
Senior management or the board is accountable for implementing a quality program.
d)
External assessments of the internal audit activity are made by external auditors.
38.
When is initial use of the conformance phrase by internal auditors appropriate?
a)
After an internal review completed within the past 5 years.
b)
After an external review completed within the past 10 years.
c)
After an internal review completed within the past 10 years.
d)
After an external review completed within the past 5 years.
39.
Which of the following would demonstrate that the internal audit activity is in compliance with IIA practices?
a)
The chief audit executive determines the form and content of the results communicated.
b)
The results of external assessments are communicated upon their completion.
c)
The results of periodic internal assessments are communicated at least twice a year.
d)
The results of ongoing monitoring are communicated upon their completion.
40.
Why should a chief audit executive recommend that the results of an external quality assessment be shared with the board?
a)
To motivate staff in the internal audit activity to accept the need for external assessment.
b)
To provide accountability and transparency for the internal audit activity’s operations.
c)
To emphasize the importance of the internal audit activity’s charter.
d)
To increase communications between the internal audit activity and the audit committee.
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