Opaud 3

• This identifies what the internal audit function will review based on available resources and the needs and priorities of the organization.

  • A.Audit Checklist
  • B. Audit Plan
  • C. Operations Manual
  • D. Audit Manual
  • B. Audit Plan
• 2. _______ factors are conditions and other variables that in their present, or absence, as the case may be, either exacerbate or diminish the underlying risk.

  • a.Risk
  • B. Audit
  • C. Operations
  • D. Planning
  • a.Risk
• 3. The following questions/inquiries can be used in determining risk, EXCEPT:

  • A.Where are the people, processes, systems, or assets vulnerable?
  • B. What could go wrong?
  • C. What is the passcode lock of that computer?
  • D. How could that unit fail?
  • C. What is the passcode lock of that computer?
• 4. Audit Evidence can be in the form of the following, EXCEPT:

  • A.Observation
  • B. Workpapers
  • C. Flowcharts
  • D. None of the above. All options are forms of audit evidence.

  • D. None of the above. All options are forms of audit evidence.
• 5. A review of how an organization's management and its operating procedures are functioning with respect to their effectiveness and efficiency in meeting stated objectives.

  • A.Internal Audit
  • B. Operational Audit
  • C. Cash Audit
  • D. External Audit
  • B. Operational Audit
• 6. The auditor faces a risk that the audit will not detect material misstatements in the financial

  statements. In regard to minimizing this risk, the auditor primarily relies on:

  • A.Substantive procedures
  • B. Tests of controls
  • C. Internal control
  • D. Statistical analysis
  • A.Substantive procedures
• 7. Which of the following is least likely to be included in an auditor's inquiry of management while obtaining information to identify the risks of material misstatement due to fraud?

  • A.Are all financial reporting operations at one location?
  • B. Does it have knowledge of fraud or suspect fraud?
  • C. Does it have programs to mitigate fraud risks?
  • D. Has it reported to the audit committee the nature of the company's internal control?

  A.Are all financial reporting operations at one location?
• 8. The primary purpose of the internal auditors' evaluation of internal control is to:

  • A.Determine if management has planned and implemented activities needed to attain goals and objectives.
  • B. Determine the extent of tests of controls needed during field work.
  • C. Identify areas for fraud investigation.
  • D. Determine if employees have incompatible duties that have compromised the control environment.
  • A.Determine if management has planned and implemented activities needed to attain goals and objectives.
• . The internal auditing department provides information about control and quality of performance to:

  • A.Management and the board of directors.
  • B. A level in the organization sufficient to ensure acceptance of all recommendations.
  • C. Outside agencies for regulatory and financial compliance.
  • D. Any member of the organization upon request.
  • A.Management and the board of directors.
• 10. The scope of an internal audit is initially defined by the:

  • A.Audit objectives
  • B. Scheduling and time estimates
  • C. Preliminary survey
  • D. Audit program
  • A.Audit objectives
• 11. Interviewing operating personnel, identifying he objectives of the auditee, identifying standards used to evaluate performance, and assessing the risk inherent in the auditee's operations are activities typically performed in which phase of an internal audit?

  • A.The fieldwork phase
  • B. The preliminary survey phase
  • C. The audit programming phase
  • D. The reporting phase

  b.The preliminary survey phase
• 12. Which of the following best describes the scope of internal auditing as it has developed to date?

  • A.Internal auditing involves appraising the economy
  • B. Internal auditing involves evaluating compliance with policies, plans
  • C. Internal auditing has evolved to verifying the existence of assets
  • D. Internal auditing has evolved to more of an operational orientation from a financial orientation.

  d.
• 13. Which of the foilowing statements best describes why the profession of cpa has deemed it essential to promulgate a code of professional conduct for enforcing observation of the code?

  • A.A distinguishing mark of a profession is its acceptance of responsibility to the public.
  • B. A prerequisite to success is the establishment of an ethical code
  • C. A requirement of most state laws calls for the profession to establish a code of ethics.
  • D. An essential means of self-protection for the profession


  A
• 14. A primary purpose for establishing a code of conduct within a professional organization is to:

  • A.Reduce the likelihood that members of the profession will be sued for substandard work
  • B. Ensure that all members of the profession perform at approximately the same level of competence
  • C. Demonstrate acceptance of responsibility to the interests of those served by the profession
  • D. Require members of the profession to exhibit loyalty in all matters pertaining to the affairs of their organization.

  c.Demonstrate acceptance of responsibility to the interests of those served by the profession
• 15. Corporate governance is a process by which the owners and creditors of an organization.

  • A.Exert control
  • B. Require accountability.
  • C. Exert control and require accountability
  • D. Neither exerts control nor requires accountability.


  c Exert control and require accountability
• 16. Governance demands accountability back through the system to the:

  • Ashareholders
  • B. audit committee
  • C. management
  • D. All of the above

  shareholders
• 17. The corporate governance responsibilities of management include:

  • establishing risk management processes.
  • B. establishing proper internal controls.
  • C. requiring high ethical standards.
  • D. All of the above.


  All of the above.
• 18. All of the following groups have responsibility for ensuring proper corporate governance except:

  • stockholders
  • B. board of directors
  • C. regulatory agencies
  • D. All of the above have responsibility.

  All of the above have responsibility.
• 19. A proper system of corporate governance is one that demands

  • decision making by auditors in place of management.
  • B. accountability back through the system to the shareholders.
  • C. internal audit representation on the board of directors.
  • D. audit planning to obtain competent and sufficient audit evidence.

  accountability back through the system to the shareholders.
• 20. Companies with good governance generally have the following characteristic(s):

  • are less likely to engage in "financial engineering".
  • B. take the requirements of good internal control over financial reporting seriously.
  • C. make a commitment to financial competencies needed.
  • D. All of the above.

  All of the above.
• 
  

  Which of the following statements is/are false?

  • Statement I only.

  
• 22. After assessment of risk maturity, periodic audit planning is done which results to the production of:

  • Audit report
  • B. Planning report
  • C. Audit plan
  • D. Risk register

  Audit plan
• 23.

  S1. Risk-based audit applies to both internal and external audits.

  S2. The scope of internal auditing should encompass the examination of the adequacy and effectiveness

  of the organization's system of internal control and the quality of performance in carrying out assigned

  responsibilities.

  Which of the following statements is/are true?

  • Statement I only.
  • B. Statements I and Il.
  • C. None of the statements
  • D. Statement II only.

  Statements I and Il.
• 24.The following are planning considerations in operations audit except

  • Conduct a preliminary risk assessment by utilizing a group interview.
  • B. Gather top management input on the preliminary risk assessment.
  • C. Prepare a Draft Annual Audit Plan based upon the results of the risk assessment process.
  • D. Preparation of audit point sheet.

  Preparation of audit point sheet.
• 25.Who is responsible for reviewing and approving the final engagement communication before its

  issuance?

  • Chief Executive Officer
  • B. Chief Audit Executive
  • C. Chief Operating Officer
  • D. Audit Committee Chair
  • B. Chief Audit Executive