MCQ - Internal Audit Essentials

The purpose of the internal audit activity can be described as :

• Providing additional assurance regarding fair presentation for financial statements

• Adding value to the organization

• Expressing an opinion on the adequate design and functioning of the system of internal control

• Assuring the absence of any fraud that would materially affect the financial statements

In complying with The IA’s Code of Ethics, an internal auditor should

• Use individual judgment in the application of the principles set forth in the Code

• Respect and contribute to the objectives of the organization even if it is engaged in illegal activities

• Go beyond the limitation of personal technical skills to advance the interest of the organization

• Primarily apply the competency principle in establishing trust

Which one of the following risks is difficult to quantify?

• Credit

• Trading

• Finance

• Reputation

Which of the following is TRUE?

• In any organisation, Management must eliminate risks inherent in its activities at all cost.

• Identifying risks is not necessary in order to perform an internal audit

• Responsibility to manage risk lies with each and

  every individual in the organization.

• Recording revenue before a sale transaction has occurred should be encouraged to maximise profits of the company and meet

  targets.

COSO is the short name for

• Committee of Sponsoring Organisations of the Thompson Commission

• Controls, Systems, Structure and Planning Framework

• Committee of Sponsoring Organisations of the Simpson Commission

• Committee of Sponsoring Organisations of the Treadway Commission

The term ‘risk’ is best defined as the possibility that

• An internal auditor will fail to detect a material misstatement that causes financial statements r internal reports to be misstated or misleading

• An event could occur affecting the achievement of objectives

• Management will, either knowingly or unknowingly, make decision that increase the potential liability of the organization

• Financial statements or internal records will contain material misstatements

What is IA’s mission statement?

• To support and protect organization value by accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control and governance processes

• To enhance and protect organizational value by providing risk-based and objective assurance, advise and insight

• To provide an independence, objective assurance and consulting activity designed to add value and improve customer operations

• To enhance and provide an independence value by providing risk-based and objective assurance, consulting activity and insight

What is Internal Audit Charter?

• IA Charter is a statement of internal audit control

• IA Charter is a policy and procedures that establish the roles of internal audit

• IA Charter is a formal document that defines the internal audit activity’s purpose, authority and responsibility

• IA charter is a guideline on internal audit activity

A small business uses segregation of duties for processing checks and cash received at its office. No financial transaction is handled by one person from start to finish. This is an example of a ______

• Mitigation control

• Preventive control

• Detective control

• Directive control

By comparing job descriptions with the qualifications and duties of the individuals currently holding these jobs, a manager can

• Complete the human resource planning cycle

• Determine whether the organization is appropriately staffed

• Forecast future personnel needs

• Determine which employees should be promoted