D. Is substantially more in scope than a compilation. Terms. 2) obtain reports from other accountants who reviewed a portion of the total entity. Student: ___ 1. The audit file comes in many shapes and forms, ... You use this information to verify rent expense on the financial statements. C. until it is clear that the new supervisor has assumed the responsibilities. Internal auditing has evolved to verifying the existence of assets and reviewing the means of safeguarding assets. D. the advent of specialised audit groups. The guide explains what ICFR is and describes management’s responsibility for implementing effective ICFR. A. selected from existing relevant policy statements, manuals, laws, or regulations, or are defined by the The statement that best describes internal auditing is: Question options: 1) an activity located within an entity, primarily to detect fraud. In financial statement audits, the audit process should be conducted in accordance with. The board of directors or audit committee being required to approve the removal of the head of Internal Another best example that describes audit documentation would be the working paper that auditor prepares to document and test depreciation expenses. Est time: 1ñ3 mins focus? Strong internal control increases the level of confidence and decreases the extent of transaction and balance testing. Which of the following will best promote the independence of the internal auditing function? b. involved in their operation) providing the head of internal audit reports to the board of directors or audit B. The internal auditing department provides information about control and quality of performance to: B. We'll review your answers and create a Test Prep Plan for you based on your results. The internal audit department of a large corporation has established its operating plan and budget for the coming year. C. Identify risks, evaluate risks, treat risks, analyse risks. The IIA’s globally accepted definition of internal auditing states that: “Internal auditing is an independent, objective assurance and consulting activity designed to add value and improve an organization’s operations. In reporting on an entity's internal control structure over financial reporting, a practitioner should include a paragraph that describes the A) Documentary evidence regarding the control environment factors. Auditing can be bifurcated into: Internal Auditing (Generally done by the management for process improvements and / or precautionary purposes) External Auditing (Generally, statutory in nature) 5: Key Deliverables (Accounting vs. Internal Auditing Chapter Exam Take this practice test to check your existing knowledge of the course material. A. Learning Objective: 14.1 Understand the evolving nature of internal auditing. C. increased emphasis on corporate governance and business risk management. Est time: < 1 min The main objectives of an effective audit committee include: 1) strengthening the role and influence of non-executive directors. The Australian National Audit Office (ANAO) reports directly to: The key benefit to management of there being an internal audit function is that: It provides assurance to management that the organisation is complying with its legal. c. Fraud is either an intentional or unintentional misstatement of the financial statements, depending on materiality. Factors currently driving change in internal audit include all of the following, except for: A) Internal auditing involves appraising the economy and efficiency with which resources are employed. D. until after the next annual review of the external auditors. this finding in her report even though she knows it will adversely affect employee morale in the cash function. In order to design further audit procedures the auditor must assess the risk of material misstatement in the financial statements. management of there being an internal audit function is that: It can be carried out by an external agency or an internal department. D. outside agencies for regulatory and financial compliance. Interpretations clarifying terms or concepts within the Standards. Which of the following best describes the operational audit? A quality control system within the internal auditing function designed to ensure that departmental objectives Which of the following statements best describes internal auditing?A. D. The internal auditor should prepare procedures manuals for systems, but should not be involved in their Major issues confronting internal audit include the following, except for: A. certifies the reliability and integrity of financial and operating information. The purpose of an internal auditor's review for effectiveness of the internal control structure is to ascertain Difficulty: Easy B. Jones was extremely pleased with the internal controls and the operation of the cash function and in her Management fraud may exist, and it is more likely to be detected by independent auditors than by internal auditors. The statement that best describes internal auditing is: 1) an activity located within an entity, primarily to detect fraud. 1. B. D. Australian Securities and Investments Commission. Which of the following best describes the operational audit? Whether it’s computing taxes owed or suggesting ways to cut costs, you’ve got a framework in place to keep things in order. C. the same as the criteria used in evaluating the internal control structure in an engagement to report on the internal auditors members of management. are met. 4) all of the above are legislated powers of the Auditor General. And an atmosphere of mutual trust and respect between the internal audit activity and the audit committee is critical to the committee’s independent oversight role. Answers A: The director of internal auditing should report to the chief … are covered by workers compensation. 3) It provides assurance to management that fraudulent activities will be detected. There are three key differences in the activities of internal and external auditors. To determine the nature, timing, and extent of audit testing. Section: The future of internal audit, Chapter - Chapter 14 # The most effective way to ensure that freedom is to: a. D. defined in Australian Auditing Standards. a. B) the financial statements are the client's responsibility. Internal auditing often extends beyond examinations leading to the expression of an opinion on the fairness of financial presentation and includes audits of efficiency, effectiveness, and ... d. Compliance. It is not appropriate for internal auditors to design, install or operate systems or write procedures manuals a. B) Auditors are responsible to detect material errors but have no responsibility to detect material frauds that are concealed through employee collusion or management override of the internal control structure. B. Income tax auditing c. Government auditing d. External auditing ... 16.Which of the following best describes the purpose of the control activities? 12. A. B. unqualified, qualified, adverse, or a disclaimer of opinion. impair the internal audit department's independence. design, Est time: < 1 min Learning Objective: 14.3 Understand what internal auditors do in practice. They provide their experienced opinion on the truthfulness of the company’s financial statements and perform work on a test basis to monitor systems in place. Which of the following best describes internal auditors' responsibilities regarding their entity's policies, Correct. following is an action in which due professional care is lacking? Internal audit is a regular, continuous activity that is performed by an internal audit department of an organization. Internal control. Definition. Internal auditing involves evaluating compliance with laws, regulations, and contracts Internal auditing has evolved to verifying the existence of assets and reviewing the means of safeguarding assets. includes C. any member of the entity upon request. Once an internal auditor has completed the examination, the findings are presented in a formal report. B. defined in Australian Accounting Standards. D. An independent and objective assurance activity within an entity. Which of the following best defines fraud in a financial statement auditing context? independence. a. C. Provides only limited assurance that the financial statements are fairly presented. b. Identify risks, analyse risks, evaluate risks, treat risks. Difficulty: Hard C. financial and operating data are reliable. 3) an accounting function located within an entity. We'll review your answers and create a Test Prep Plan for you based on your results. d. Compliance. It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes. Difficulty: Easy D. Jones knows that the work of the cash function can be done effectively with one less employee. Any major contracts with suppliers, customers, or unions are also kept in the permanent file. A. Est time: 1ñ3 mins but should not operate such systems. Privacy An internal auditor is a trusted consultant charged with advising upper management on how to best manage the company’s risks and goals. 12 239. B. Chapter - Chapter Category # of Questions. Which of the following best describes how the detailed audit plan of a financial statement auditor compares with the audit client’s comprehensive internal audit plan? D. International Auditing Standards. B. furnishes management with information needed to effectively discharge its responsibilities. Generally accepted auditing standards (GAAS) are a set of principles that auditors follow when reviewing a company's financial records. According to the IIA Standards, the authority of the internal auditing department is limited to that granted a. Learning Objective: 14.5 Appreciate the approaches to assessing risk management, control and governance processes. Est time: 1ñ3 mins D) only after an … The independent auditor’s audit of the financial statements and their report Matters required to be discussed by Statement on Auditing Standards (SAS) No. B. Chapter - Chapter 14 # Learning Objective: 14.1 Understand the evolving nature of internal auditing. Which of the following best describes the reason why an independent auditor is often retained to report on financial statements? The approach that has been suggested for operational audits is: a. the risk based audit approach b. the value-for-money audit approach c. the process audit approach d. all three of the above approaches have been suggested for operational audits 9. The work performed by internal auditors might be such a factor when the work includes a) Verification of the mathematical accuracy of invoices. (A) An auditor should design an audit to provide reasonable assurance of detecting errors and fraud that are material to the financial statements. 2. D. Management being kept informed of internal audit work schedules and budget requirements. Chris is upset at himself for not visiting Keith more often.D. WHAT WORKS BEST An active and knowledgeable audit committee is fundamental to achieving and maintaining an effective control environment. Wendy Jones, CIA, works for a large department store. Which of the following aspects does not help ensure organisational independence of internal audit? It is a matter of considerable judgment to select appropriate issues for the audit committee's attention and to describe them in the proper context. A. have a responsibility to develop appropriate policies, plans and procedures, and they are responsible Thank You All. D. Identify risks, evaluate risks, analyse risks, treat risks. B. management is provided with assurance that the organisation is complying with legal requirements. The types of operational audit reports given by an internal auditor are: Provides less assurance than an audit. Chris is worried that Keith is lying to him.B. the principle of: A. Evaluation. Learning Objective: 14.4 Gain an appreciation of the issues that may face the internal audit profession in the future. Internal auditing often extends beyond examinations leading to the expression of an opinion on the fairness of financial presentation and includes audits of efficiency, effectiveness, and. A. D. A review of the internal audit function by the external auditor. Est time: 1ñ3 mins 4) perform analytical procedures designed to identify relationships that appear to be unusual. C. An activity located within an entity that determines the fiscal integrity of a financial report. In a recent study in the US, which types of risks were found to be the fastest growing area of internal audit Difficulty: Hard Internal audit should be involved in the design of internal control systems, because of the knowledge of External auditors have no responsibility to the organization other than determining the accuracy of annual financial statements. The typical audit report is documentation of the work performed and results obtained. Standards? Internal auditing often extends beyond examinations leading to the expression of an opinion on the fairness of financial presentation and includes audits of efficiency, effectiveness, and . Difficulty: Medium Question: 8) Which Of The Following Best Describes Internal Auditing's Primary Purpose In Reviewing The Organization's Existing Governance, Risk Management And Controls Processes? On implementation, Internal Audit should examine the performance management arrangements used by the service team that owns the relationship with the outsourced provider – typically HR for hotline services. controls, A) Auditors should design an audit to provide reasonable assurance of detecting errors and frauds that are material to the financial statements. and applicable laws and regulations? She is performing an audit of her company's cash Section: The evolving nature of internal auditing, Chapter - Chapter 14 # d. An activity located within an entity, primarily to detect fraud. C. Direct reporting responsibilities to the entity's chief financial officer. C. appraises the economy and efficiency with which resources are used. c. Accuracy. 3) obtain written confirmation from management regarding loans to officers. Section: Approaches to assessing risk management, control and governance processes, Copyright © 2021 StudeerSnel B.V., Keizersgracht 424, 1016 GC Amsterdam, KVK: 56829787, BTW: NL852321363B01, Mid 14 February 2017, questions and answers, You need an account to keep reading this document. The typical audit does not provide the reader on the board or in top management with the information they need to run the organization. A. Internal auditing is an independent, objective, assurance and consulting activity that adds value to and improves an organization’s operations. Dennis Applegate describes the history of the external audits in an article appearing in the magazine Internal Auditor as follows. C. the audit committee and the chief financial officer. The Institute of Internal Auditors (IIA) is the foremost international professional association for internal auditing. that are audited comply with appropriate requirements. A. examination report, review report, or compilation report. D. the entity's goals and objectives have been achieved. A. it aids management in the areas of risk management, control and governance processes. The auditor's best defense when material misstatements are not uncovered is to have conducted the audit: A) in accordance with generally accepted auditing standards. B. A. Section: Approaches to assessing risk management, control and governance processes, Section: Current standards for and understanding the practice of internal auditing, Section: Current standards for internal auditing, Section: The evolving nature of internal auditing. Section: Current standards for and understanding the practice of internal auditing, Chapter - Chapter 14 # Est time: 1ñ3 mins Auditing Internal Audit Risk. Internal auditors: Auditing Question added by UNIES MAHLANGU , administration clerk , department of justice and constitutional development 4) It aids management in the areas of risk management, control and governance processes. Statements of core requirements for the professional practice of internal auditing and for evaluating the effectiveness of performance that are internationally applicable at organizational and individual levels. REQUIRED: The best description of Internal audit activity. An accounting function located within an entity.C. Which of the following statements best describes an auditor’s responsibility to detect errors and fraud? a. The approach that has been suggested for operational audits is: 4) all three of the above approaches have been suggested for operational audits. B. C. financial report or compliance report. internal Learning Objective: 14.4 Gain an appreciation of the issues that may face the internal audit profession in the future. 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