Study Unit 1: Internal Audit Function Flashcards
(33 cards)
Monitoring internal audit operations to ensure progress toward objectives is the responsibility of
The chief audit executive (CAE).
Ongoing monitoring involves the__[1]___,___[2]___, and ___[3]___ of the internal audit function.
1-Day-to-day supervision
2-Review
3-Measurement
Define governance as it relates to the internal audit function.
Governance is the combination of processes and structures that inform, direct, manage, and monitor the activities of the organization toward the achievement of its objectives.
Define risk management as it relates to the internal audit function.
Risk management is a process to identify, assess, manage, and control potential events or situations to provide reasonable assurance regarding the achievement of the organization’s objectives.
Define control as it relates to the internal audit function.
Control is any action taken to manage risk and increase the likelihood that established objectives and goals will be achieved.
Who is responsible for implementing governance processes and structures?
The board.
Define compliance.
Compliance is defined as adherence to policies, plans, procedures, laws, regulations, contracts, or other requirements.
Who evaluates the controls regarding compliance?
Controls regarding compliance are evaluated by the internal audit function.
What does efficient performance accomplish?
Efficient performance accomplishes objectives in an accurate, timely, and economical fashion.
What does economical performance accomplish?
Economical performance accomplishes objectives with minimal use of resources proportionate to the risk exposure.
Reasonable assurance is achieved when
The most cost-effective measures are taken in the design and implementation of controls to reduce risks and restrict expected deviations to a tolerable level.
What are the two types of internal audit engagements?
Assurance services
Advisory services
Why do internal auditors conduct assurance services?
Assurance services are conducted by internal auditors to objectively evaluate different areas to ensure everything is functioning correctly.
Define advisory services.
Advisory services are ways that internal auditors offer guidance to an organization’s stakeholders without guaranteeing results or taking on management roles.
According to Standard 9.3 Methodologies, the CAE must
Evaluate the effectiveness of internal audit methodologies and revise them if necessary to successfully meet the goals of the internal audit function.
What are the three principles relating to review and revision?
The organization
1-Identifies and assesses changes that may substantially affect strategy and business objectives
2-Reviews its performance results and considers risk
3-Pursues improvement of enterprise risk management (ERM)
What does internal audit function reporting provide assurance about?
1-Governance
2-Risk management
3-Control
What internal audit administrative activities is a CAE responsible for?
1-Creating an operating and financial budget
2-Implementing policies and procedures, assuring the internal audit function has sufficient personnel
3-Allocating internal audit function’s resources
4-Communicating internal audit activities and engagement findings to stakeholders
5-Preparing and monitoring time budgets
6-Conducting internal audit personnel evaluations
Where can policies and procedures regarding internal audit be found?
A large, mature internal audit function may include policies and procedures in a formal operations manual. A smaller internal audit function may be managed informally through daily supervision and memos.
Who is responsible for managing the financial resources of the internal audit function?
The chief audit executive (CAE).
As part of managing financial resources, what must the CAE develop for the internal audit function?
The budget.
Who approves the internal audit function’s budget?
The board.
What purposes does the budget of an internal audit function serve?
The budget serves as a:
1-Plan
2-Control
3-Motivator
4-Means of communication and coordination
What are the key steps of the budget process?
1-Defining the objective and scope of an engagement
2-Conducting resource analysis
3-Identifying budget components
4-Estimating costs
5-Developing the budget
6-Reviewing and seeking approvals
7-Implementing, monitoring, and controlling
