Stategic & Operational Roles Of IA Flashcards
(25 cards)
Internal auditing is an assurance and consulting activity. An example of an assurance service is a(n)
Advisory Engagement
Facilitation Engagement
Training Engagement
Compliance Engagement
Compliance engagement
What is the most accurate term for the procedures used by the board to oversee activities performed to achieve organizational objectives?
Governance
Control
Risk management
Monitoring
Governance
The key factor in the success of an internal audit activity’s human resources program is
An informal program for the developing and counseling staff
A compensation plan based on years of experience
A well developed set of selection criteria
A program for recognizing the special interests of individual staff members
A well developed set of selection criteria
A basic principle of governance is
Assessment of the governance process by an independent internal audit activity.
Holding the board, senior management, and the internal audit activity accountable for its effectiveness.
Exclusive use of external auditors to provide assurance about the governance process.
Separation of the governance process from promoting an ethical culture in the organization.
Assessment of the governance process by an independent internal audit activity.
Which of the following is most likely an internal audit role in a less structured governance process?
Design specific governance processes.
Playing a consulting role in optimizing governance processes and structure.
Providing advice about basic risks to the organization.
Evaluating the effectiveness of specific governance processes.
Providing advice about basic risks to the organization.
Ensuring effective organizational Performance management and accountability is most directly the proper function of
Control
Governance
Risk management
A quality assurance program
Governance
Which of the following is most essential for guiding the internal audit staff
Quality program assessments
Position descriptions
Performance appraisals
Policies and procedures
Policies and procedures
Written policies and procedures relative to managing the internal audit activity should
Ensure compliance with its performance standards.
Give consideration to its structure and the complexity of the work performed.
Result in consistent job performance. Prescribed the format and distribution of engagement communications and the classification of observations.
Give consideration to its structure and the complexity of the work performed
Audit committees have been identified as a major factor in promoting the independence of both internal and asked external auditors. Which of the following is the most important limitation on the effectiveness of audit committees?
Audit committees maybe composed of independent directors. However, those directors may have close personal and professional friendship with management. Audit committee members are compensated by the organization and thus favor and owner’s view.
Audit committees devote most of their efforts to external audit concerns and do not pay much attention to the internal audit activity in the overall control environment.
Audit committee members do not normally have degrees in the accounting or auditing field.
Audit committees may be composed of independent directors. However, those directors may have personal and professional friendships with management.
The audit committee strengthens the control processes of an organization by
Assigning the internal audit activity responsibility for interaction with governmental agencies.
Using the chief audit executive as a major resource in selecting the external auditors. Following up on recommendations made by the chief audit executive.
Approving internal audit activity policies.
Following up on recommendations made by the chief audit executive.
In accounting association established a code of ethics for all members. What is one of the association’s primary purposes of establishing the code ethics?
To outline criteria for professional behavior to maintain standards of integrity and objectivity.
To establish standards to follow for effective accounting practices.
To provide a framework within which accounting policies could be effectively developed and executed
To outline criteria that can be used in conducting interviews of potential new accountants.
To outline criteria for professional behavior to maintain standards of integrity and objectivity.
The best reason for establishing a code of conduct within an organization is that such codes
Are typically required by governments.
Express standards of individual behavior for members of the organization.
Provide a quantifiable basis for personnel evaluations.
Have tremendous public relations potential.
Express standards of individual behavior for members of the organization.
The code of ethics of a professional organization sets forth
Broad standards of conduct for the members of the organization.
Organizational details of the profession’s governing body.
A list of illegal activities that are proscribed to the members of the profession.
A basis for the measurement of internal audit performance.
Brought standards of conduct for the members of the organization.
A chief audit executive should include in regular evaluations of internal and external audit activity an assessment of which of the following?
Only external audit cost.
Efficiency of only internal audit activity.
Aggregate audit cost.
Effectiveness of only external audit activity.
Aggregate audit cost.
Which of the following is responsible for coordination of internal and external audit work?
The board.
The chief audit executive.
Internal auditors.
External auditors.
The chief audit executive.
The internal audit activity has a role in an organization’s governance process. The internal audit activity most directly contributes to this process by
Identifying significant exposures to risk.
Evaluating the effectiveness of the risk-management system.
Promoting continuous improvement of controls.
Evaluating the design of ethics-related activities.
Evaluating the design of ethics-related activities.
Employee resistance to change may be caused by
Only simple surprise or inertia.
Manipulation of information or events.
Bad timing.
Coercion.
Bad timing.
Organizational change must be considered in the light of potential employer resistance. Resistance
May occur even though employees will benefit from the change.
Will be greatest when informal groups are weakest.
Will be insignificant if no economic loss by employees is expected.
Is centered mostly on perceived threats to psychological needs.
May occur even though employees will benefit from the change.
Co-optation is a
Method of coping with employee resistance.
Cause of resistance to change.
Model for categorizing organizational changes.
Way of allowing meaningful input by resistant employees.
Method of coping with employee resistance.
The purpose of the internal audit activity’s evaluation of the effectiveness of existing risk management processes is to determine that
Management has planned and designed so as to provide reasonable assurance of achieving objectives.
Management directs processes so as to provide reasonable assurance of achieving objectives.
The organization’s objectives will be achieved efficiently and economically.
The organization’s objectives will be achieved in an accurate and timely manner and with minimal use of resources.
Management directs processes so as to provide reasonable assurance of achieving objectives.
Internal auditors should review the means of physically safeguarding assets from losses arising from
Misapplication of accounting principles.
Procedures that are not cost justified.
Exposure to the elements.
Under usage of physical facilities.
Exposure to the elements.
If organization has no formal risk management processes, the chief audit executive should
Establish risk management processes based on industry norms.
Formulate hypothetical results of possible consequences resulting from risks not being managed.
Inform regulators that the organization is guilty of an infraction.
Formally discuss with the directors their obligations for risk management processes.
Formally discuss with the directors their obligations for risk management processes.
The internal audit activity’s quality assurance and improvement program is the responsibility of
External auditors.
The chief audit executive.
The board.
The audit committee.
The chief audit executive.
At what minimal required frequency does the chief audit executive report the results of internal assessments in the form of ongoing monitoring to senior management and the board?
Monthly.
Quarterly.
Annually.
Biennially.
Annually.
