WorksheetsUnit 6.1: Effective Communication of Engagement Results.
Total questions: 55
Worksheet time: 2hrs 50mins
Name
Class
Date
1.
A primary purpose of engagement communications in internal auditing is to
a)
Provide detailed technical analysis.
b)
Inform, persuade, and get results.
c)
Engagement communications are to inform stakeholders of findings, persuade them of the value of those findings, and encourage management to change and improve. This purpose supports the effectiveness and value of the audit process.
d)
Replace existing management processes.
2.
Avoiding unnecessary technical language is best associated with which quality of communication addressed in the Standards?
a)
Accurate.
b)
Concise.
c)
Clear.
d)
Complete.
3.
Engagement field work has identified a number of significant findings. Additional tests from the original engagement work program still have to be performed, but data are not readily available. Evaluate the following and select the best alternative.
a)
Do not issue the engagement communication until all testing has been completed.
b)
Issue an interim engagement communication to management regarding the negative findings noted.
c)
Identify other alternative tests to complete prior to reporting the engagement findings.
d)
Perform engagement tests when the final data are available.
4.
As an internal auditor at a local plant, the plant is similar in age, siting, and construction to no other plants owned by the same organization that have been recently cited for discharge of hazardous wastes. In addition, you are aware that chemicals manufactured at the plant release toxic by-products. Assume that you have evidence that the plant is discharging hazardous wastes. The CAE, as a certified internal auditor, is the appropriate communication requirement in this situation?
a)
Send a copy of your engagement communication to the appropriate regulatory agency.
b)
Ignore the issue because the regulatory inspectors are better qualified to assess the danger.
c)
Issue an interim engagement communication to the appropriate levels of management.
d)
Note the issue in your workpapers but do not report it.
5.
An internal auditor has just completed an engagement and is in the process of preparing the final engagement communication. The findings in the final engagement communication should include
a)
Conclusions about the cause of an finding.
b)
Pertinent factual statements concerning the control weaknesses uncovered during the course of the engagement.
c)
Statements of both fact and opinion developed during the course of the engagement.
6.
The scope statement of an engagement communication should
a)
Describe the engagement objectives and tell the reader why the engagement was conducted.
b)
Identify the activities reviewed and describe the nature and extent of work performed.
c)
Define the standards, measures, or expectations used in evaluating engagement findings.
d)
Communicate the internal auditor's evaluation of the effect of the findings on the activities reviewed.
7.
Which of the following is most appropriate for inclusion in the summary of a final engagement communication?
a)
Operational management responses to recommendations.
b)
A cache statement of engagement findings.
c)
Reference to areas not covered by the engagement.
d)
Discussion of recommendations given in prior years' engagement communications.
8.
The internal auditor completed work on a segment of the engagement work program. As a result, the internal auditor determined that a modification of the organization's distribution procedures is required. The management of the activity under review agreed and has implemented revised procedures. The internal auditor should
a)
Research the problem and recommend in the final engagement communication measures that should be taken.
b)
Jointly develop and communicate an appropriate recommendation.
c)
Communicate the problem and assume that management will take appropriate action.
d)
Indicate in the final engagement communication that management determined and implemented corrective action.
9.
An internal auditor found that employees in the maintenance department were not signing their time cards. This situation also existed during the last engagement. The internal auditor should
a)
Include this finding in the current engagement communication.
b)
Ask the manager of the maintenance department to assume the resulting risk.
c)
Withhold conclusions about payroll internal control in the maintenance department.
d)
Instruct the employees to sign their time cards.
10.
The manner in which data and evidence are gathered, evaluated, and summarized for presentation should be done with care and precision. Which quality of communications does this statement best describe?
a)
Objective.
b)
Accurate.
c)
Timely.
d)
Constructive.
11.
According to IIA guidance, when an engagement final communication contains a significant error, the chief audit executive is required to do which of the following?
a)
Issue a written report to individuals who can ensure that engagement results are given due consideration.
b)
Issue a written report to the audit committee and senior management.
c)
Communicate corrected information to all individuals who received the original communication.
d)
Communicate corrected information to all those who might have relied on the original communication.
12.
Internal audit function requires that final engagement communications not be issued without a management response. An engagement with significant findings is complete except for management's response. Evaluate the following courses of action and select the best alternative.
a)
Issue an interim engagement communication regarding the important issues noted.
b)
Modify the policy to allow a specific time period for management's response.
c)
Wait for management's response and then issue the engagement communication.
d)
Discuss the situation with the external auditors.
13.
A relatively new internal auditor is completing a final engagement communication. The communication should most appropriately be designed to
a)
Internal auditor because of a greater level of detailed knowledge of the report.
b)
Internal auditor and the manager of the activity under review to indicate that they concur with the report.
c)
Chief audit executive.
d)
Chair of the audit committee.
14.
During a review of purchasing operations, an internal auditor finds that current procedures differ markedly from stated organizational procedures. However, the internal auditor determines that the current procedures used represent an increase in efficiency and a decrease in processing time, without a discernible decrease in control. The internal auditor should
a)
Report the lack of adherence to documented procedures as an operational risk exposure.
b)
Develop a flowchart of the new procedures and include it in the report to management.
c)
Report the change and suggest that the change in procedures be documented.
d)
Suspend the completion of the engagement until management documents the new procedures.
15.
Which of the following is not included in the statement of scope in an engagement final communication?
a)
Period covered by the engagement.
b)
Engagement objectives.
c)
Activities reviewed.
d)
Systems and components.
16.
The scope section of an internal auditor's final engagement communication should identify
a)
The engagement techniques used.
b)
Any limitations imposed.
c)
The sampling methodology employed.
d)
Any unresolved differences with management of the activity under review.
17.
During an engagement involving sales representatives' travel expenses, the internal auditor discovered that 152 of 200 travel advances issued to sales representatives in the past year exceeded the maximum amount allowed. Which of the following elements is a justifiable engagement conclusion?
a)
The majority of travel advances in the organization exceed the prescribed maximum.
b)
Travel advances are not controlled in accordance with existing policy.
c)
The prescribed maximum travel advance is too low.
d)
Seventy-six percent of all travel advances exceed the management-prescribed maximum.
18.
Which of the following statements best defines an internal auditor's professional judgment following an assurance engagement?
a)
A summary of the significant engagement facts.
b)
The internal auditor's professional judgment about the situation that was reviewed.
c)
Conclusions that must be included in the final engagement communication.
d)
Recommendations for corrective action.
19.
Which of the following statements is appropriate as a conclusion in an internal auditing final communication of the results of an engagement to evaluate the organization's branch operations?
a)
Statistical sampling was used to determine the extent of unauthorized purchases from the imprest fund.
b)
The engagement to review branch operations was conducted in accordance with the organization's risk management objectives.
c)
The vice-president of branch operations should require the timely review of the daily transaction report as a recommendation, not a conclusion.
d)
Stating that the engagement scope is not a conclusion.
20.
A final communication issued by an internal auditor following an assurance engagement should contain a conclusion when
a)
The area of the engagement is the financial statements.
b)
The internal auditors' work is to be used by external auditors.
c)
A full-scope engagement has been conducted on activity.
d)
A conclusion communication improves communication with the readers of the communication.
21.
At a minimum, the following elements should be included in final engagement communications: purpose, scope, and results. Results include findings, conclusions, recommendations, and action plans. Which of the following describes all of the elements missing from the engagement communication?
a)
Engagement objectives.
b)
The status of findings from prior engagement communications.
c)
Related activities not reviewed.
d)
Documentation of previous oral communications.
22.
A - Scope, conclusion, recommendation.
a)
Operational management should provide an opportunity to respond before the report is written.
b)
The final engagement communication is an optional item in the final engagement communication.
c)
The internal auditor should be based on the wording and authority of the internal audit function's charter.
d)
The internal auditor should obtain the necessary authority to allow them to communicate.
23.
Record findings and recommended courses of action.
a)
Operational management should have an opportunity to respond before the report is written.
b)
The internal auditor should ensure that management has implemented internal auditors' recommendations or management's action plans following an established methodology.
c)
The internal auditor should be based on the wording and authority of the internal audit function's charter.
d)
The internal auditor should obtain the necessary authority to allow them to communicate.
24.
The internal auditor determines whether (1) the desired results were achieved or (2) senior management or the board has assumed the risk of not taking action. The internal auditor determines whether (1) the desired results were achieved or (2) senior management or the board has assumed the risk of not taking action. Which of the following describe(s) the person(s) responsible for the problem. (S)he may or should know how to solve the problem.
a)
The conditions that have not been corrected are not unique and do not require ad hoc solutions.
b)
The conditions that have not been corrected are not unique and do not require ad hoc solutions.
c)
The internal auditors determine whether management has taken action or implemented the recommendation.
d)
The internal auditors determine whether management has taken action or implemented the recommendation.
25.
The internal auditor determines whether (1) the desired results were achieved or (2) senior management or the board has assumed the risk of not taking action. The internal auditor determines whether (1) the desired results were achieved or (2) senior management or the board has assumed the risk of not taking action. Which of the following describes the key elements to consider when communicating with senior management and the board?
a)
The overall audit process.
b)
The scope of the communication.
c)
The CAE determines the scope and approves the engagement communication.
d)
The CAE determines the scope and approves the engagement communication.
26.
The most important message for the internal auditor to convey to senior management is
a)
The development of the new software is behind schedule.
b)
The programmers want to buy new software.
c)
The project is expected to be completed on time and within budget.
d)
The programming of the sampling techniques will be completed one week early.
27.
The internal auditor should
a)
Disclose it with the expected reduction in programming costs to provide full disclosure.
b)
Leave it out of the engagement communication because it is irrelevant.
c)
Emphasize it because it is outside the budget.
d)
Leave it out of the engagement communication to avoid criticism.
28.
Recent criticism of an internal audit function suggested that engagement coverage was not providing adequate feedback to senior management on the latest developments in the organization's key lines of business. The problem was further defined as lack of feedback on the recent implementation of automated support systems. Which two functions does the chief audit executive need to improve?
a)
Staffing and communicating.
b)
Staffing and decision making.
c)
Planning and organizing.
d)
Planning and communicating.
29.
The internal audit function for a chain of retail stores recently concluded an engagement to evaluate sales adjustments in all stores in the Southwest region. The engagement revealed that several stores are costing the organization substantial sums in duplicate credits to customers' charge accounts. The final engagement communication published six weeks after the engagement was concluded incorporated the internal auditors' recommendations to store management that should prevent duplicate credits to customers' accounts. Which of the following standards has been disregarded?
a)
The follow-up actions were not adequate.
b)
The internal auditors should have implemented appropriate corrective action as soon as the duplicate credits were discovered.
c)
Internal auditor recommendations should not be included in the final engagement communication.
d)
The final engagement communication was not timely.
30.
When an internal auditor is communicating with operational management, the internal auditor should emphasize and management characteristics can damage the communication process. An internal auditor has only limited control over situational factors but has substantial control over message characteristics, though the internal auditor performed the engagement communication. The internal auditor should emphasize and management characteristics can damage the communication process. Which of the following is a message characteristic that the internal auditor who prepared the engagement communication overlooked?
a)
Sequence of message.
b)
Clarity of the audience.
c)
Noise.
d)
Prior encounters with the operational management.
31.
The objectives of an engagement communication are to inform and to influence. Whether these objectives are met depends on the clarity of the writing. Which of the following principles of communication clarity was violated in the engagement communication?
a)
Appropriately organize the communication.
b)
Keep most sentences short and simple.
c)
Use active voice verbs.
d)
All of the answers are correct.
32.
Word selection can have an impact on the recipient when presenting an engagement communication in either oral or written form. In an oral or written presentation in which the internal auditor's objective is to persuade an individual to accept the recommendations, using words with strong or emotional connotation rather than words with low connotation
a)
May move the recipient deliberately in the direction of the internal auditor's recommendation.
b)
May misfire quickly, moving the recipient away from the internal auditor's recommendation.
c)
Will cause the recipient to accept the internal auditor's recommendations quickly with no reservations.
d)
Will have no effect whatsoever on the recipient.
33.
When making a presentation to management, the internal auditor wants to report findings, conclusions, and recommendations and to stimulate action. These objectives are best accomplished by
a)
Delivering a lecture on the engagement results.
b)
Showing a series of slides or overheads, which graphically depict the engagement results; limit verbal commentary.
c)
Using slides/overheads to support a discussion of major points.
d)
Handing out copies of the final engagement communication, asking the participants to read it and asking for questions.
34.
Successful communication between the internal auditor and the department under review partially depends on achieving appropriate emphasis so that both parties are aware of the most important points in their discussion. Which of the following approaches provides the most emphasis in an engagement communication?
a)
Graphics, repetition, and itemization.
b)
Solid paragraphs and detailed appendices.
c)
Calm discussion in a conversational tone.
d)
Key points embedded in discussion.
35.
When reviewing a report prepared by an internal auditor who has a personal friend employed in the activity under review, a chief audit executive's primary focus would be to ensure which of the following?
a)
The report is fair, impartial, and unbiased.
b)
The report is easily understood and findings are presented in a logical manner.
c)
The report is clearly worded and avoids unnecessary detail, redundancy, and wordiness.
d)
The report does not contain criteria by which the concept of "excessive inventory" is judged.
36.
It does not contain criteria by which the concept of "excessive inventory" is judged. A major deficiency in paragraph #5 related to the completeness of the engagement communication is that
a)
There is no indication of the potential cause of the problem.
b)
It does not contain criteria by which the concept of "excessive inventory" is judged.
c)
It does not adequately describe the potential effect of the conditions noted.
d)
The recommendations are not required and are not appropriate given the nature of the problem identified.
37.
A major deficiency in paragraph #6 related to the completeness of the engagement communication is that
a)
Factual support for the finding is not given.
b)
Cause of the problem is not defined.
c)
Risk is presented in an overdramatic fashion.
d)
Recommendation is incomplete.
38.
A major deficiency in paragraph #8 is that
a)
The nature of the follow-up action is inappropriate.
b)
The findings were not discussed with division management before being presented to upper management.
c)
The cost savings mentioned are not supported in the engagement communication.
d)
All of the answers are correct.
39.
A major writing problem in paragraph #5 is
a)
The use of potentially emotional words such as "conservatism" of local management.
b)
The presentation of findings before recommendations. The engagement communication would have more impact if recommendations are made before the findings are discussed.
c)
The specific identification of "component parts" may be offensive to the personnel responsible for those parts and may reflect negatively on them.
d)
The reference to other parts of the engagement communication citing excessive inventory write-downs for obsolescence is not appropriate. If there is a problem, it should all be discussed within the context of the specific engagement finding.
40.
A major deficiency in paragraph #7 related to the completeness of the engagement communication is
a)
No separate section adequately discusses the risks associated with the finding.
b)
The recommendation does not follow the finding. The recommendation could have been reached without any finding.
c)
The condition for the finding is not clearly explained.
d)
The reference to other parts of the engagement communication citing excessive inventory write-downs for obsolescence is not appropriate. If there is a problem, it should all be discussed within the context of the specific engagement finding.
41.
One operating department of an organization does not have adequate procedures for inspecting and verifying the quantities of goods received. To evaluate the materiality of this control deficiency, the internal auditor should review the department's
a)
Year-end inventory balance.
b)
Annual inventory purchases.
c)
Year-end total assets.
d)
Annual operating expenses.
42.
An internal auditor's communication of engagement results
a)
Need not include an overall finding on the engagement.
b)
May not be in the form of a summary report.
c)
Must include a scope statement describing the objectives.
d)
Should omit management accomplishments and emphasize corrective action.
43.
During an engagement involving the receiving section of the purchasing division, the internal auditor discovers that a receiving problem might be the result of procedures followed in the procurement section. The CAE agrees that the internal auditor should extend the engagement, on a limited scale, into the procurement section. According to the Standards, which device should be used to communicate the change in engagement scope to management of the division under review?
a)
An informal notification to the involved supervisor.
b)
A written interim communication to the involved supervisor.
c)
A written interim communication to the involved supervisor and the same distribution as the original correspondence scheduling the engagement.
d)
No communication is necessary if the internal audit function's charter specifies the unrestricted scope of its work.
44.
Which of the following is false with respect to the use of interim engagement communications? Interim engagement communications
a)
Are used to communicate information that requires immediate attention.
b)
Are used to communicate a change in engagement scope for the activity under review.
c)
Are used to keep management informed of engagement progress when engagements extend over a long period of time.
d)
Eliminate the need for issuing final engagement communications.
45.
The internal auditors have completed an engagement in the purchasing department and are preparing their final report. Throughout the engagement, the auditors have shared results with the purchasing manager. Which of the following is not a goal of the final audit report?
a)
Resolve conflicts.
b)
Describe the technical aspects of the methods used during the engagement.
c)
Assure agreement with the findings and recommendations.
d)
Improve relations with the internal audit function and the purchasing department.
46.
According to the Standards, when a signed report be issued?
a)
A signed report is required after the engagement’s completion.
b)
A signed report is issued after a conclusion is not reached.
c)
Interim reports may be oral or written and may be transmitted formally or informally.
d)
Every engagement requires a signed report.
47.
The CAE determines the appropriate recipients of engagement communications, such as those managing plans responding to findings and senior managers who oversee activities reviewed and supervise managers directly involved. Senior management and the board most likely receive
a)
Interim reports.
b)
Executive summaries.
c)
Oral reports.
d)
Final written reports only.
48.
According to the Global Internal Audit Standards, which of the following is part of the minimum requirements for an engagement final communication? Background information Objectives of the engagement Engagement scope Recommendations Summaries
a)
1, 2, and 3 only.
b)
2, 3, and 5 only.
c)
1, 2, 3, and 4.
d)
2, 4, and 5 only.
49.
To enhance communications with top management, some internal audit functions include an executive summary with each written engagement communication. What information should be included in such a summary report?
a)
The same information as the overall report but in diagram form.
b)
Highlights of the engagement results.
c)
The internal auditor's assessment of the adequacy of internal controls.
d)
Only information needed to resolve the disagreements between operational management and the internal auditors.
50.
An internal audit function to evaluate the organization's marketing effort. You agreed to keep the marketing vice president informed of your progress on a regular basis. What method should be used for those progress reports?
a)
Oral or written interim reports.
b)
Written reports signed by the chief audit executive.
c)
Copies of working paper summaries.
d)
Briefing of the appropriate marketing first-line supervisor.
51.
An internal audit function is conducting an engagement to evaluate the payroll and accounts receivable departments. Significant problems related to the approval of overtime have been noted. While the engagement is still in process, which of the following engagement communications is appropriate?
a)
A summary communication.
b)
A final written communication.
c)
A questionnaire-type communication.
52.
The most appropriate use of an oral engagement communication is to communicate
a)
Sensitive matters to management when the chief audit executive does not commit to them to writing.
b)
Complex matters to operating management when the possibility exists that misunderstanding would result from reducing them to writing.
c)
Conditions that demand immediate action.
d)
Matters that are not material.
53.
If the internal auditor decides that the situation warrants management's immediate attention and the entire engagement will not probably take the form of a(n)
a)
Summary written report to operating management.
b)
Oral report to senior management.
c)
Written interim report to operating management.
d)
Regular written report to operating management.
54.
With the final report on an operations audit due in 3 weeks, the internal auditor finds a violation of fire safety codes. Which of the following describes the best course of action the auditor could take?
a)
Document the condition and plan to discuss it with management in the exit interview.
b)
Notify the local fire department.
c)
Notify the finding immediately to the maintenance department.
d)
Alert responsible management immediately in a written or an oral interim report.
55.
Which of the following are valid reasons to submit an interim report? Communicating a change in engagement scope. Updating management on progress during a long engagement. Informing management of significant matters, even if unrelated to the engagement. Addressing audit findings that will be excluded from the final report.
a)
1 and 2 only.
b)
1, 2, and 3 only.
c)
3 and 4 only.
d)
1, 2, 3, and 4.
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