Internal Audit CH1-4 – Flashcards
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AVF Company's new CFO has asked the company's CAE to meet him to discuss the role of the internal audit function. The CAE should inform the CFO that the overall responsibility of internal auditing is to
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Serve as an independent assurance and consulting activity designed to add value and improve the company's operations
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Which of the following statements is not true about business objectives?
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Business objectives are management's means of employing resources and assigning responsibilities
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Within the context of internal auditing, assurance services are best defined as
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Objective examinations of evidence for the purpose of providing independent assessments
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Internal auditors must have competent interpersonal skills. Which of the following does not represent an attribute of interpersonal skills?
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Project management
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While planning an internal audit, the internal auditor obtains knowledge about the auditee to, among other thingss
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Develop an understanding of the auditee's objectives and risks
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A primary purpose of the Standards is to
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Establish a basis for evaluating internal audit performance
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An internal auditor provides income tax services during tax season. For which of the following activities would the auditor most likely be considered in violation of The IIA's Code of Ethics?
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Preparing, for a fee, a division manager's personal tax returns
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In which of the following situations does the internal auditor potentially lack objectivity?
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A former purchasing assistant performs a review of internal controls over purchasing four months after being transferred to the internal audit department
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According to the Standards, which of the following must the internal audit manager think about when considering appropriate due care while planning an assurance engagement?
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The cost of assurance in relationship to potential benefits
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Which of the following types of IPPF guidance require(s) an exposure to the various IIA national institutes prior to its issuance? I. A new Practice Advisory II. A new Standard III. A new Position Paper IV. A new definition in the Standards glossary
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III only
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Which of the following is an appropriate governance role for an organization's board of directors?
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Providing assurance directly to third parties that the organization's governance processes are effective
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Which of the following are typically governance responsibilities of senior management? I. Delegating risk tolerance levels to risk managers II. Monitoring day-to-day performance of specific risk management activities III. Establishing a governance committee of the board IV. Ensuring that sufficient information is gathered to support reporting to the board
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I and IV
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ABC utility company sells electricity to residential customers and is a member of an industry association that provides guidance to electric utilities, lobbies on behalf of the industry, and facilitates sharing among its members. From ABC's perspective, what type of stakeholder is this industry association?
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Influences the company
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Who is responsible for establishing the strategic objectives of an organization?
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Senior management
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Who is ultimately responsible for identifying new or emerging key risk areas that should be covered by the organization's governance process?
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Senior management
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According to COSO ERM, all of the following are elements of an organization's internal environment except
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Setting organizational objectives
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Which of the following is not an example of a risk-sharing strategy?
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Selling a nonstrategic business unit
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Which of the following is not a potential value driver for implementing ERM?
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Financial results will improve in the short run
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When senior management accepts a level of residual risk that the CAE believes is unacceptable to the organization, the CAE should
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Discuss the matter with knowledgeable members of senior management and, if not resolved, take it to the audit committee
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A manufacturing company has identified the following risk: "Failure of employees to conduct required quality control procedures may result in a high level of customer returns." To which type of objective does this risk most directly relate?
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Operations
