Audit test 2

Question 1

Business process

Answer 1

he set of connected activities linked with each
other for the purpose of achieving one or more business objectives

Question 2

Top-Down

Answer 2

Begins at the entity level with the organization’s objectives, and then identifies the key processes critical to the success of each of the organization’s objectives.

Question 3

Bottom-Up Approach

Answer 3

Begins by looking at all processes directly at the activity level, and then aggregates the identified processes across the organization.

Question 4

Business processes/risks (Retail Store)

Answer 4

Customer selects goods - Pays for or promises to pay - customer accepts possession of goods.

Question 5

Responses to Risks

Answer 5

Accept
Avoid
Pursue - action take to accept risk in order to improve performance
Reduce - action taken to reduce risk, while still continuing current operations
Share - action taken to reduce risk by transferring some risk to another party

Question 6

Quality of audit

Answer 6

Competence and independence

Question 7

Individual Objectivity

Answer 7

: an unbiased mental attitude.

Question 8

Organizational Independence

Answer 8

: The freedom from conditions that threaten the ability of the internal audit function to carry out internal audit responsibilities free from interference.

Question 9

Due Professional Care

Answer 9

: The care and skill expected of a reasonably prudent and competent internal auditor.

Question 10

Integrity and Objectivity rule

Answer 10

In the performance of any professional
service, a member shall maintain objectivity
and integrity, shall be free of conflicts of
interest, and shall not knowingly
misrepresent facts or subordinate his or her
judgment to others.

Question 11

Prohibited Business Relationship

Answer 11

The independence of a CPA is impaired if CPA performs a managerial or other significant role for an entity’s organization during the time period covered by an attest engagement

Question 12

Risk management

Answer 12

Is a process conducted by management to understand and deal with uncertainties that could affect the ability to achieve its business objectives

Question 13

Competence and capabilities

Answer 13

Experience & expertise

Question 14

Professional Due Care

Answer 14

care and skill expected from an competent internal auditor

Question 15

Professional Skepticism

Answer 15

Auditors take nothing for granted, they continuously question what they hear and see and critically assess audit evidence.

Question 16

reasonable Assurance:

Answer 16

A level of assurance that is supported by GAAP procedures and judgements

Question 17

Vouching

Answer 17

Tracking information backward from one document or record to a PREVIOUSLY prepared document or record or to a tangible resource.

Question 18

Tracking

Answer 18

Tracking information FORWARD from one document, record, or tangible resource to a subsequently prepared document or record.

Question 19

Analytical Procedures

Answer 19

Assessing information obtained during an engagement by comparing the information with expectations identified or developed by the Internal Auditor

Question 20

Persuasiveness of Audit

Answer 20

Relevant, Reliable, Sufficient

Question 21

Relevant

Answer 21

does the evidence pertain to the audit objective? Does it logically support the internal auditor’s conclusion or advice

Question 22

Sufficient

Answer 22

Has the internal auditor obtained enough evidence?

Question 23

Reliable

Answer 23

Did the evidence come from a credible source? Did the Internal Auditor directly obtain the evidence

Question 24

Persuasiveness of evidence

Answer 24

Competent-relevant, reliability
Sufficiency - Quantity

Question 25

Reliability of Evidence

Answer 25

High - Documents prepared by internal Auditors. Documents sent directly from 3rd party. (Cutoff bank stmts) Medium - Documents created by 3rd party, sent to organization, then sent to internal auditors. (Vendor invoices) Low - Documents created by organization (written policy stmts, time cards)

Question 26

Inspection procedure

Answer 26

examine stuff

Question 27

Reperformance

Answer 27

Recalculation to confirm amounts are EXACT

Question 28

Confirmation

Answer 28

going to 3rd party to confirm account numbers

Question 29

Existence or occurrence

Answer 29

Going Backward to get to the beginning of the transaction.

Question 30

Rights and obligations

Answer 30

Company holds the rights to the assets, while liabilities are the obligations of the company

Question 31

Competness

Answer 31

Starting at the beginning and working forward to the end of the transaction.

Question 32

Valuation

Answer 32

The way in which a company gets depreciation expense or allowance for doubtful accounts

Question 33

Accuracy

Answer 33

The correct #s are on the financials

Question 34

presentation and disclosure

Answer 34

Accounts are classified in accordance to GAPP and financial stmt disclosures are complete, appropriate, and clear

Question 35

Authorization

Answer 35

all transactions are properly authorized

Question 36

SALES Shipping document -> Sales Journal -> G/L

Answer 36

Completeness - all earned income was recorded

Question 37

SALES Shipping document <- Sales Journal <- G/L

Answer 37

Existence - all recorded transactions are valid or earned

Question 38

PURCHASES Receiving Report -> vendor invoice -> Purchases journal

Answer 38

Completeness - make sure all recieving reports have made it to the books

Question 39

PURCHASES Receiving Report <- vendor invoice <- Purchases journal

Answer 39

Existence - To make sure all recorded purchases are valid

Question 40

Audit risk model

Answer 40

AR = IR * CR * DR

Question 41

Coso cube component's

Answer 41

Control Environment, Risk Assessment, Control Activities, INFO/Communication, monitoring activities.

Question 42

Planning Audit Engagement

Answer 42

1. determine objectives/scope 2. understand auditee, including auditee objectives and assertions 3.Identify and assess risks 4.Identify key controls 5.Evaluate adequacy of control design 6. Create a test plan 7. Develop a work program 8. allocate resources to engagement

Question 43

Ask the organization's outside legal counsel to provide info about any litigation claims, and/or assessments against the organization

Answer 43

Inquiry

Question 44

Compare a sample of check copies to support voucher packets to test the validity of the checks

Answer 44

Vouching

Question 45

Examine selected inventory items to determine their condition

Answer 45

Inspection

Question 46

Watch employees involved in executing and recording cash disbursement transactions to determine whether they are performing their assigned responsibilities

Answer 46

observation

Question 47

Track internal auditor test counts of inventory to the auditee's inventory compilation records to verify that the counts are properly included in the compilation

Answer 47

tracking

Question 48

Recalc accumulated depreciation expense to verify that they were calculated correctly

Answer 48

Reperformance

Question 49

calc accounts payable turnover for the current year and preceding 2 periods as evidence of vendor payment periods

Answer 49

Analytical procedures

Question 50

Contact banks to ensure that the recorded account bank balances agree w their records

Answer 50

confirmation

Question 51

There are no unrecorded receivables

Answer 51

completeness

Question 52

Receivables have not been sold

Answer 52

rights+obligations

Question 53

There is adequate provision for uncollectible accounts

Answer 53

valuation

Question 54

All accounts in AR TB are expected to be collected within one year

Answer 54

disclosure/presentation

Question 55

Any agreement or condition that restricts the nature of trade receivables is known to be disclosed

Answer 55

disclosure/presentation

Question 56

All accounts on the list arose from the normal course of business and are not due from related parties

Answer 56

disclosure/presentation

Question 57

No sales transactions from the next period were recorded in the current period

Answer 57

Cutoff

Question 58

Total AR subsidiary accounts agree with the total in the AR TB

Answer 58

Accuracy

Question 59

There are no receivables that do not correspond w goods having been shipped

Answer 59

Existence

Question 60

All credit sales adhere to the credit policy

Answer 60

authorizations

Question 61

Documents for A/R-Sales

Answer 61

Shipping document (BOL) - Sales invoice - Sales journal

Question 62

Documents for Purchases/AR

Answer 62

Receiving report - Vendor invoice - Purchases Journal