Chapter 13

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Author:
blessieghee
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85826
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Chapter 13
Updated:
2011-05-14 19:43:50
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Finals
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Internal Auditing
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  1. Which of the following is not likely to be an assurance engagement objective?

    A. Evaluated the design adequacy of the payroll input process.

    B. Guarantee the accuracy of recorded inventory balances.

    C. Assess compliane with health and safety laws and regulations

    D. Determine the operating effectiveness of fixed asset controls
    B. Guarantee the accuracy of recorded inventory balances.
  2. A process objective stating "All contracts must me approved by an officer of the company before being consummated" is an example of what type of objective?

    A. Strategic
    B. Reporting
    C. Compliance
    D. Operations
    C. Compliance
    (this multiple choice question has been scrambled)
  3. Analytical procedures can be applied during which phase(s) of an assurance engagement?

    A. Plan phase
    B. Perform Phase.
    C. Communicate phase
    D. Plan and perfom phases
    D. Plan and perfom phases
    (this multiple choice question has been scrambled)
  4. Which of the following auditee-prepared documents will likely be of greatest assistance to the internal auditor in their assessment of process desing adequacy?

    A. Narrative memoranda listing key tasks for portions of the process
    B. Detailed flowchars depicting the flow of the process
    C. Policies and procedures manual
    D. Organization charts and job descriptions
    B. Detailed flowchars depicting the flow of the process
    (this multiple choice question has been scrambled)
  5. Which of the following controls is not likely to be an entity-level control?

    A. All employees must recieve ongoing training to ensure they maintain their competence

    B. All cash disbursement transactions must be approved before they are paid

    C. All employees must comply with the Code of Ethics and Business Conduct

    D. An organizationwide risk assessment is conducted annually
    B. All cash disbursement transactions must be approved before they are paid
  6. Which of the following is not typically a key element of flowcharts or narrative memoranda?

    A. Overall process of objectives.
    B. Key inputs to the process.
    C. Key outputs from the process
    D. Key risks and controls
    A. Overall process of objectives.
    (this multiple choice question has been scrambled)
  7. Which of the following external risks is least lkely to impact the accuracy of the financial reporting?

    A. The standard setting body in the organization's country isseus a financial accounting standard

    B. A recent judicial court case increase the likelihood that pending litigation will result in an unfavorable outcome

    C. Changes in standard industry contracts now allow for netting of payables and receivables

    D. Competitor pressures cause the organization to pursue new sales channels
    D. Competitor pressures cause the organization to pursue new sales channels
  8. Which of the following groups' risk tolerance levels are least relevant when conducting an assurance engagement?

    A. The internal audit function
    B. Senior management
    C. Process-level management
    D. Vendors and customers
    D. Vendors and customers
    (this multiple choice question has been scrambled)
  9. Which of the following controls is likeley to be least relevant when evaluating the desing adequacy of a cash collections process?

    A. Calculating the amount of cash received

    B. Documenting the rationale for selecting the bank account into which the deposit will be made

    C. Matching the total deposits to the amounts credited to customers' A/R balances

    D. Segregating the preperation of deposit slips from the adjustment of customer account balances
    B. Documenting the rationale for selecting the bank account into which the deposit will be made
  10. An internal auditor determiens that the process is not designed adequately to reduce the underlying risks to an acceptable level. Which of the following should the internal auditor do next?

    A. Wirte the audit report, there's no reason to test the operating effectiveness of cotnrols that are not designed adequately.

    B. Test compensating cotnrols in other (adjacent) processes to see if the impact of the desing inadequacy is reduced to an acceptable level

    C. Test the existing key controls anyway to prove that, despite the design inadequy, the process is still meeting the process objectives.

    D. Postpone the engagement until the design inadequacy has been rectified
    • B. Test compensating cotnrols in other (adjacent) processes to see if
    • the impact of the desing inadequacy is reduced to an acceptable level
  11. In an internal auditor identifies na exception while testing, which of the foloowing may be appropriate?

    A. Test additional items to determine whether the exception is an isolated occurrence or indicative of a control deficiency

    B. Gain an understanding of the root cause, that is, the reason the exception occurred.

    C. Draft an observation for the audit report.

    D. All of the above
    D. All of the above
  12. Which of the folllowing is an appropriate conclusion that can be drawn when the internal auditor idnetifies an observation from testing controls?

    A. The process objectives cannot be achieved.

    B. The area may be vulnerable to fraud

    C. Certain risk are not effectively mitigated

    D. Overall, the process is not operating effectively
    C. Certain risk are not effectively mitigated
  13. Once an observation is identified by the internal auditor, it should be:

    A. Discussed with the audit committee
    B. Scheduled for follow-up
    C. Documented in the working papers.
    D. Included in the final audit report
    C. Documented in the working papers.
    (this multiple choice question has been scrambled)

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