INTERNAL AUDITING & CONTROLS REVIEW QUESTIONS MODULE 2 MULTIPLE CHOICE Select the best answer for each

of the following unrelated items. Answer each of these items in your examination booklet by giving the number of your choice. For example, if the best answer for item (a) is (1), write (a)(1) in your examination booklet. If more than one answer is given for an item, that item will not be marked. Incorrect answers will be marked as zero. Marks will not be awarded for explanations. a) The chief audit executive (CAE), in discharge of his or her duties, shall be accountable to management and the audit committee to do which of the following? 1) Provide information periodically on the status and results of the annual audit plan and the sufficiency of department resources 2) Report on the financial performance of the company 3) Ensure that the financial statements are properly prepared for review by the external auditors 4) Set up controls for the detection and prevention of fraud b) Which of the following statements is an advantage to outsourcing the internal audit function? 1) Outsourcing the audit function means internal audit staff will be responsible for responding to urgent management requests. 2) Outsourcing of routine, non-specialized assignments eliminates the cost of employing an internal auditor. 3) Consultants will not be familiar with the company or its corporate culture, and therefore will have no allegiance to members of the companys administration. 4) Outsourcing provides access to leading-edge practices, such as developed enterprise risk frameworks that can be used to identify business risk. c) Which of the following is a specific standard for the performance of internal audit work? 1) Internal auditors should provide sufficient support to the work performed by external auditors. 2) Internal auditors should follow up to ascertain that appropriate action is taken on reported audit findings. 3) The director of internal auditing should establish a program for selecting and developing the human resources of the internal audit department. 4) The director of internal auditing should establish plans to carry out the responsibilities of the internal audit department. d) Which of the following best describes attribute standards? 1) Attribute standards describe the characteristics of specific types of services. 2) Attribute standards address the characteristics of organizations and individuals performing internal audit services.

3) Attribute standards describe the nature of internal audit services and provide quality criteria against which the performance of these services can be measured. 4) Attribute standards apply the professional competence standards to specific types of services. e) The internal audit activity evaluates and contributes to the improvement of risk management, control, and governance systems. Which of the following statements is associated with the improvement of governance? 1) The internal audit activity should ascertain the extent to which operating and program goals and objectives have been established and conform to those of the organization. 2) The internal audit activity should review operations and programs to ensure consistency with organizational values. 3) The internal audit activity should be free from interference in determining the scope of internal auditing, performing work, and communicating results. 4) The internal audit activity should adopt a process to control and assess the overall effectiveness of the quality program. f) Which of the following areas are addressed by attribute standards? 1) Independence, objectivity, and nature of the work 2) Independence, communication of findings, and the resolution of problems affecting the risks accepted by management 3) Independence, objectivity and proficiency 4) Engagement planning, engagement execution, and progress monitoring g) Which of the following are generally viewed as advantages of outsourcing the internal audit function? 1) Better knowledge of the specific industry, better training, and enhanced flexibility 2) Lower costs, better training, and better response to managements urgent requests 3) Better knowledge of the specific industry, enhanced flexibility, and better response to managements urgent requests 4) Access to new expertise, enhanced flexibility, and lower costs Solutions to multiple choice questions: a) b) c) d) e) f) g) 1 4 2 2 2 3 4