Internal Auditing Chapter 1 – Flashcards

AVF Company's new CFO has asked the company's CAE to meet with 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: a. Serve as an independent assurance and consulting activity designed to add value and improve the company's operations. b. Assess the company's methods for safeguarding its assets and, as appropriate, verify the existence of the assets. c. Review the integrity of financial and operating information and the methods used to accumulate and report information. d. Determine whether the company's system of internal controls provides reasonable assurance that information is effectively and efficiently coummunicated to management.

Which of the following statements is not true about business objectives? a. Business objectives represent targets of perfomance. b. Establishing meaninful business objectives is a prerequisite to effective internal control c. Establishing meaningful business objectives is a key component of the management process. d. Business objectives are management's means of employing resources and assigning responsibilities.

Within the context of internal auditing, assurance services are best defined as: a. objective examinations of evidence for the purpose of providing independent assessments. b. advisory service intended to add value and improve an organization's operations. c. professional activities that measure and communicate financial and business data. d. objective evaluations of compliance with policies, plans, procedures, laws and regulations.

Internal auditors must have competent interpersonal skills. Which of the following does not represent and attribute of interpersonal skills? a. communication b. leadership c. project management d. team capabilities

While planning an internal audit, the internal auditor obtains knowledge about the auditee to, among other things: a. develop an attitude of professional skepticism about management's assertions b. develop an understanding of the auditee's objectives and risks. c. make constructive suggestions to management concerning internal control improvements. d. evalutate whether misstatements in the auditee's performance reports should be communicated to senior management and the audit committee.