chapter 1 internal auditing
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An internal auditor engages in the preparation of income tax returns during the tax season. For which of the following activites might the auditor most likely be in violation of the code of ethics?
a. Writing a tax guide that is intended for publica - B
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Under what circumstances would an internal auditor be required to forfeit the CIA designation?
A. Upon leaving the internal auditing profession.
b. After action by The IIA's International Ethics Committee.
c. When found by The IIA's Board - C
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An audit of a foreign subsidiary disclosed payments to local government officals in return for orders. What action does the code of ethics suggest for internal auditors in such a case?
a. Refrain from any action that might be detrimental to their em - C
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During the audit of one of its organization's nuclear power plants, an internal auditing team discovered serious instances of violations of safety procedures. The Code of Ethics requires the audit team to:
a. Present sufficient factual evidence with - D
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Which of the following would constitute a violation of the code of ethics?
a. Discussing your organization's data processing control system at a trade convention.
b. Purchasing stock in a target after overhearing an organization executive discu - B
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Auditing to determine whether an entity is managing and using its resources economically and efficiently would most appropriately be classified as:
a. Compliance auditing
b. Financial auditing
c. Operational auditing
d. Program result - C
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According to the Standards, who is responsible for coordinating internal and external audit efforts?
a. Chief audit executive.
b. External auditors.
c. Audit committee of the board of directors
d. Chief financial officer. - A
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One of the purposes of the Standards is to:
a. Establish the certification criteria for a CIA.
b. Specify the content of the internal auditing department's charter.
c. Serve as a guide in determining the reliance that can be placed on the - D
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The purpose of governmental effectiveness or program results auditing is to determine if desired results of a program are being achieved. The first step in conducting such an audit should be to:
a. Evaluate the system used to measure results.
b - D
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In a broad sense, society benefits from internal auditing because the internal auditor:
a. Enforces corporate compliance with the standards of public policy.
b. Promotes the efficient and effective use of resources.
c. Evaluates financial - B
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An internal auditor who had been supervisor of the accounts payable section should not audit that section:
a. Because there is no way to measure a reasonable period of time in which to establish independence.
b. Until enough time has elapsed to - B
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The function of internal auditing,as related to internal financial reports, would be to:
a. Ensure compliance with reporting procedures.
b. Review the expenditure items and match each item with the expenses incurred.
c. Determine if there - D
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According to the Standards, due professional care calls for:
a. Detailed audits of all transactions related to a particular function.
b. Infallibility and extraordinary performance when the system of internal controls is known to be weak.
- C
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According to the standards, the primary purpose for internal auditing's evaluation of the adequacy of an organization's system of internal controls is to determine:
a. If controls are designed to insure that the organization's objectives will be met - A
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Which of the following actions would be a violation of auditor independence
a. Continuing on an audit assignment at a division for which the auditor will soon be responsible as the result of a promotion.
b. Reducing the scope of an audit due to - A
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Which of the items below would be a violation of The IIA's code of eithics?
a. Certain facts evidenced in the auditor's working papers that helped to support the basic allegations made by the auditor as to a case of fraud were not included in the au - D
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When required to select adequate operating standards to evaluate an activity, the internal auditors should:
a. Seek client agreement on a set of appropriate standards.
b. Conclude that internal control is not effective.
c. Choose the stand - A
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According to the Standards, an internal auditor's role with respect to operating objectives and goals includes:
a. Approving the operating objectives or goals to be met.
b. Determining whether underlying assumptions are appropriate.
c. Dev - B
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The best description of the purpose of internal auditing is that it:
a. Furnishes members of the organization with information needed to effectively discharge their responsibilities.
b. Reviews the reliability and integrity of financial and ope - A
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According to the Standards, the independence of internal auditors is achieved through:
a. Staffing and supervision.
b. Continuing education and due professional care.
c. Human relations and communications.
d. Organizational status and - D
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Which of the following actions by an auditor would violate the code of ethics?
a. An audit of an activity managed by the auditor's spouse.
b. A material financial investment in the organization.
c. Use of an organization car.
d. A sig - A
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The standards requires that the CAE seek the approval of management and acceptance by the board of a formal written charter for the internal auditing department. The purpose of this charter is to:
a. Protect the internal auditing department from und - B
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An auditor often faces special problems when auditing a foreign subsidiary. Which of the following statements is false with respect to the conduct of international audits?
a. The IIA standards do not apply outside the U.S.
b. The auditor should - A
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Which of the following could be an organization factor that might adversely affect the ethical behavior of the CAE?
a. The CAE reports directly to an independent audit committee of the board of directors.
b. The CAE is not assigned any operatio - D
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As used by the internal auditing profession, the standards refers to all of the following except:
a. Criteria by which the operations of an internal audit department are evaluated and measured.
b. Criteria which dictate the minimum level of eth - B
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According to the standards, internal auditors should possess the knowledge, skills, and disciplines essential to the performance of internal auditing. This means that all internal auditors should be proficient in applying:
a. Internal auditing stand - A
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An auditor discovers some material inefficiencies in a purchasing function. The purchasing manager happens to be the auditor's next-door neighbor and best friend. In accordance with the code of eithics, the auditor should:
a. Objectively include the - A
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An organization's new president meets the CAE for the first time, and asks him or her to briefly describe the department's overall responsibility. The CAE states that internal audit's overall responsibility is to:
a. Act as an independent appraisal - A
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Which of the following activities would not be presumed to impair the independence of an internal auditor?
I. Recommending standards of control for a new computer application.
II. Drafting procedures for running a new computer application to en - D
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Which of the following activities is outside the scope of internal auditing?
a. Assessing an operating department's effectiveness in achieving stated organizational goals.
b. Safeguarding assets.
c. Checking for compliance with laws and re - B
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In recent years, control self-assessment has become a valuable auditing tool, especially in terms of:
a. Determining the accuracy and understandability of financial events as expressed in financial documents
b. Identifying workers who may have - C
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The mission of the 1999 Competency Framework for Internal Auditing (CFIA), a research study commissioned by The IIA Research Foundation, was to:
a. Design a new internal auditing educational program to be adopted by universities, IIA affiliates, and - B
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Risk management has become an element of ever-increasing importance for modern organizations. As a result, more and more internal auditors are:
a. Reviewing all organizational insurance policies on regular-cycle basis.
b. Concentrating on the r - C
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Upon obtaining factual documentation of unethical business conduct by the vice president in charge of internal auditing, the chief audit executive should:
a. Conduct an investigation to determine the extent of the vice president's involvement in the - D