Chapter 12

Card Set Information

Author:
blessieghee
ID:
85750
Filename:
Chapter 12
Updated:
2011-05-14 04:35:31
Tags:
Finals
Folders:

Description:
Internal Auditing
Show Answers:

Home > Flashcards > Print Preview

The flashcards below were created by user blessieghee on FreezingBlue Flashcards. What would you like to do?


  1. The task performed during an internal audit assurance engagement should address the following questions:

    I. What are the reason for the results?
    II. How can performance be improved?
    III. What results are being achieved?

    The chronologial order in which these questions should be addressed is:

    A. III, I, II
    B. III, II, I
    C. II, III, I
    D. I, III, II
    A. III, I, II
    (this multiple choice question has been scrambled)
  2. While planning an assurance engagement, the internal auditor obtains knowledge about the auditee's oepration to, among other things:

    A. Develop an attitufe of professional skepticism concerning management's assertions.

    B. Make constructive suggestions to management regarding internal control improvements.

    C. Evaluate whether misstatements in the auditee's performance reports should be communicated to senior management and the audit committee.

    D. Develop an understanding of the auditee's objectives, risks, and controls.
    D. Develop an understanding of the auditee's objectives, risks, and controls.
  3. Comprehensive risk assessmenet involves analysis of both causes and effects. Which of the following statements concerning the analysis of causes and effects is false?

    A. Analyzing the causes and effects of a partivular risk should only be performed after the internal auditor has first obtained evidence that a problem has occurred.

    B. Analyzing the causes and effects of a particular risk provides insights about how to best manage the risk

    C. Analyzing the effects of a particular risk provides insights about the relative importance of the business objective threatened by the risk

    D. Analyzing the root causes of a particular risk helps the internal auditor formulate recommendations for reducing the risk to an acceptable level
    A. Analyzing the causes and effects of a partivular risk should only be performed after the internal auditor has first obtained evidence that a problem has occurred
  4. Which of the following statements does not illustrate the concept of inherent business risk?

    A. Cash is more susceptible to theft than an inventory of sheet metal.

    B. A broken lock on a security gate allows employees to access a restricted are that they are not authorized to enter.

    C. Transactions involving complex calculation are more likely to be misstated than transactions involving simple calculations

    D. Technological developments might make a particular product obsolete.
    B. A broken lock on a security gate allows employees to access a restricted are that they are not authorized to enter.
  5. Internal auditors obtain an understanding of controls and perofm tests of controls to:

    A. Detect material misstatements in account balances.

    B. Reduce control risk to an acceptably low level

    C. Evaluate the design adequacy and operating effectivness of the controls

    D. Assess the inherent risk associated with transactions
    C. Evaluate the design adequacy and operating effectivness of the controls
  6. If an internal auditor's evaluation of internal control desing indicates that the controls are designed adequately, the appropriate next step would be to:

    A. Test the operating effectiveness of the controls.
    B. Prepare a flowchar depicting the system of internal controls
    C. Conclude that residual risk is low
    D. Conclude that control risk is high
    A. Test the operating effectiveness of the controls.
    (this multiple choice question has been scrambled)
  7. Internal auditors soemtimes express opinions in addition tostating observations in their reports. Due professional care requires that internal audit opinions be:

    A. Based on experience and free from errors and judegemetn
    B. expressed only when requested by management or the audit committee
    C. Based on sufficient appropriate evidence
    D. Limited to the effectiveness of internal controls
    C. Based on sufficient appropriate evidence
    (this multiple choice question has been scrambled)
  8. Internal auditors perform both assurance engagements and consulting engagements. Which of the following would be classigied as a consulting engagement?

    A. Directly assessing the organization's compliance with laws and regulations

    B. Assessing the desing adequacy of the organization's entity-level monitoring activities

    C. Faciliating senior management's assessment of risks threatning the organizations.

    D. Assisting the independent outside auditor during the financial statement audit engagement.
    C. Faciliating senior management's assessment of risks threatning the organization
  9. Reported internal audit observations emerge by a process of comparing "what should be" with "what is." In determining "what should be" during an audit of a company's treasury function, which of the following would be the least desirable criterion against which to judge current operations?

    A. Best practices of the treasure function in relevant industries.

    B. Company policies and procedures delegating authority and assigning responsibilities

    C. Performance standards established by senior management

    D. The operations of the treasury function as documented during the last audit.
    D. The operations of the treasury function as documented during the last audit.
  10. Which of the following statements best describes an internal audit funcitons's responsibility for assurance engagement follow-up activities?

    A. The internal audit function should determine that corrective action has been taken and is achieveing the desired results, or that senior management has assumed the risk associated with no taking corrective action on reported observations.

    B. The internal audit function should determine whether management has initiated corrective action but has no responsibility to determine whether the corrective action is achieving the desired results. That determination is management's responsibility

    C. The CAE is responsible for scheduling audit follow-up activities only if asked to do so by senior management or the audit committee. Otherwise, such activities are discretionary

    D. Audit follow-up activities are not necessary if the auditee has agreed in writing to implement the internal audit function's recommendations.
    A. The internal audit function should determine that corrective action has been taken and is achieveing the desired results, or that senior management has assumed the risk associated with no taking corrective action on reported observations.

What would you like to do?

Home > Flashcards > Print Preview