P3 - 7. Internal Audit

Question 1

What is the purpose of internal audit?

Answer 1

To act as an independent and objective function that evaluates the activities of an entity

Question 2

What are the 5 main forms of internal audit?

Answer 2

1. Compliance
2. Fraud investigation
3. Value for Money
4. Environmental
5. Social

Question 3

What is a risk management function?

Answer 3

A team or department concerned with the identification, measurement and control of risks - advising management on how to identify and control risks

Question 4

What is the relationship between internal audit and risk management?

Answer 4

Internal audit test and evaluate risk controls

Question 5

What are the 5 steps in the audit process?

Answer 5

1. Audit planning and strategy
2. Individual audit planning
3. Ascertaining and documenting
4. Audit testing
5. Documentation and review

Question 6

What are 2 ways that computers are able to assist audits?

Answer 6

1. Audit software (substantive testing)
2. Posting test data

Question 7

What are 4 key elements of an effective internal audit fucntion?

Answer 7

1. Independent
2. Reporting line to the audit committee
3. Appropriately qualified
4. Knowledge and understanding of the business