Chapter 21 SM part 1

The Report of the National Commission on Fraudulent Financial Reporting suggested that public companies establish an internal auditing function and ensure its objectivity by having the director of internal audit report to the ______. Multiple choice question. Chief Financial Officer Chief Executive Officer Audit Committee

Audit Committee

An individual who has passed an examination administered by the IIA and has met the necessary experience requirements is known as a(n) ______. Multiple choice question. Internal Auditor Professional (IAP) Certified Public Accountant (CPA) Certified Internal Auditor (CIA)

Certified Internal Auditor (CIA)

True or false: Ideally, each member of the internal audit department should possess the skills and knowledge necessary to fulfill all the audit requirements of the organization.

False

True or false: The purpose, authority, and responsibility of the internal auditing department should be set forth in the department's charter as approved by the organization's chief financial officer.

False

Many companies established internal audit departments to address the need for an effective system of internal control required by this act in 1977. Multiple choice question. Report of the National Commission on Fraudulent Financial Reporting Sarbanes-Oxley Act Foreign Corrupt Practices Act

Foreign Corrupt Practices Act

The International Standards for the Professional Practice of Internal Auditing are issued by the ______. Multiple choice question. IIA PCAOB AICPA

IIA

When applicable, internal audit reports should indicate that the engagement was conducted in accordance with ______ standards. Multiple choice question. GAAP PCAOB GAAS IIA

IIA

True or false: The internal auditing department must evaluate and contribute to improving the organization's governance, risk management, and control processes using a risk-based approach.

True

The chief auditing executive is responsible for helping ensure that ______. Multiple select question. audit work provides maximum value to the organization audit activity is planned based on risk assessment plans are approved by senior management and the external auditors internal audit resources are employed efficiently and effectively

audit work provides maximum value to the organization audit activity is planned based on risk assessment internal audit resources are employed efficiently and effectively

The organization's board of directors should approve an internal audit department's ________ , which is a formal written document that outlines the department's purpose, authority, and responsibility.

charter

The group of standards related to managing the internal audit activity provide guidance for the ______. Multiple choice question. audit committee chief audit executive board of directors chief financial officer

chief audit executive

Internal auditor communication to the Board of Directors regarding quality assurance and improvement programs should include the ______. Multiple select question. conclusions qualifications of management scope of assessments corrective action plans

conclusions scope of assessments corrective action plans

To assist management with their assertion about the effectiveness of internal control required by the Sarbanes-Oxley Act, internal auditors frequently ______. Multiple choice question. test operational controls for efficiency and effectiveness assist with risk management document and test controls over financial reporting

document and test controls over financial reporting

Internal auditors must apply____ _____ in performing their work considering factors that are critical to performing an engagement, including complexity, controls, materiality, and the probability of misstatements.

due care

Two of the attribute standards address: (1) proficiency and _______ ______care; and (2) ________assurance and _______program.

due professional quality improvement

The IAA standards recognize that if audit work is to be ______, it must be adequately planned. Multiple choice question. efficient risk-free effective

effective

In addition to monitoring financial controls, internal auditors also ______. Multiple choice question. prepare financial statements evaluate and test operational controls select external auditors

evaluate and test operational controls

True or false: Because internal auditors are employees of the organization, independence is not an expectation.

false

The chief audit executive should report to the audit committee to enhance the internal audit department's ______. Multiple choice question. competence due professional care independence proficiency

independence

It is the responsibility of ______ to ensure an organization is in compliance with the requirements of the Sarbanes-Oxley Act. Multiple choice question. the audit committee internal auditors management external auditors

management

Question Mode Multiple Choice Question Internal auditing is part of the ______ component of an organization's internal control. Multiple choice question. control environment risk assessment control activities monitoring

monitoring

The quality assurance and improvement program ______ assessments of effectiveness. Multiple choice question. must include both internal and external may or may not include both internal and external should focus on external should focus on internal

must include both internal and external

Effective planning includes developing appropriate _____, ______, timing and resource allocations.

objectives scope

IAA standards are divided into two categories: _______standards and _______ standards.

performance attribute

The three parts of the Certified Internal Auditor (CIA) exam are: Essentials of Internal Auditing; _______of Internal Auditing; and ________Knowledge for Internal Auditing.

practice business

Which of the following is NOT a performance standard? Multiple choice question. proficiency and due professional care performing the engagement communicating results nature of work

proficiency and due professional care

Two of the attribute standards address: (1) ______, authority, and responsibility; and (2)________ and objectivity.

purpose independence

Which of the following is NOT a performance standard? Multiple choice question. communicating the acceptance of risks monitoring progress quality assurance and improvement engagement planning managing the internal audit function

quality assurance and improvement

To continually monitor the internal audit department, the chief audit executive should establish a(n) ______. Multiple choice question. continuing education program internal audit charter quality assurance and improvement program

quality assurance and improvement program

The communication of results of internal audit work should include ______. Multiple select question. recommendations details of resources allocated to the engagement conclusions an indication that the engagement followed GAAS standards the engagement's objectives

recommendations conclusions the engagement's objectives

The nature of internal audit work primarily includes improving ______. Multiple select question. risk management control external auditing process governance processes

risk management control governance processes