Internal Auditing Ch. 6 Quiz

The requirement that purchases be made from supplier on an approved vendor list is an example of a: Select one: a. Detective control b. Monitoring control c. Corrective control d. Preventive control

d. Preventive control

In evaluating the effectiveness and efficiency with which resources are employed, an internal auditor is responsible for Select one: a. Determining the extent to which adequate operating criteria have been established. b. Verifying the existence of assets. c. Reviewing the reliability of operating information. d. Verifying the accuracy of asset valuation

a. Determining the extent to which adequate operating criteria have been established.

Internal control can provide only reasonable assurance that the organization's objectives and goals will be met efficiently and effectively. One factor limiting the likelihood of achieving those objectives is that Select one: a. The internal auditor's primary responsibility is the detection of fraud. b. The cost of internal control should not exceed its benefits. c. The audit committee is active and independent. d. Management monitors performance.

b. The cost of internal control should not exceed its benefits.

Controls should be designed to ensure that Select one: a. C. The internal audit activity's guidance and oversight of management's performance is accomplished economically and efficiently. b. Management's plans have not been circumvented by worker collusion. c. Operations are performed efficiently and achieve established objectives. d. D. Management's planning, organizing, and directing processes are properly evaluated.

c. Operations are performed efficiently and achieve established objectives.

The control that would most likely ensure that payroll checks are written only for authorized amounts is to: Select one: a. Periodically witness the distribution of payroll checks b. Require the return of undelivered checks to the cashier c. Require supervisory approval of employee time cards d. Conduct periodic floor verification of employees on the payroll

c. Require supervisory approval of employee time cards

Audit engagement programs should: Select one: a. Reduce costly duplication of effort by ensuring that every aspect of an operation is examined b. Be generalized so as to be usable at various international locations of an organization c. Be generalized to fit all situations without regard to departmental lines d. Be tailored for the audit of each business area within the organization

d. Be tailored for the audit of each business area within the organization

An internal auditor plans to conduct an audit of the adequacy of controls over investments in new financial instruments. Which of the following would NOT be required as part of such an engagement? Select one: a. Determine if policies exist that describe the risks the treasurer may take and they types of instruments in which the treasurer may make investments b. Determine the extent of management oversight over investments in sophisticated instruments. c. Determine the nature of controls established by the treasurer to monitor the risks in investments d. Determine whether the treasurer is getting higher or lower rates of return on investments than are treasurers in comparable organizations

d. Determine whether the treasurer is getting higher or lower rates of return on investments than are treasurers in comparable organizations

Internal auditors regularly evaluate controls. Which of the following best describes the concept of control as recognized by internal auditors? Select one: a. Control procedures should be designed from the "bottom up" to ensure attention to detail. b. Control represents specific procedures that accountants and internal auditors design to ensure the correctness of processing. c. Management regularly discharges personnel who do not perform up to expectations. d. Management takes action to enhance the, likelihood that established goals and objectives will be achieved.

d. Management takes action to enhance the, likelihood that established goals and objectives will be achieved.

Who has primary responsibility for the monitoring component of internal control? Select one: a. The organization's internal audit function b. The organization's board of directors c. The organization's independent outside auditor d. The organization's management

d. The organization's management

Which of the following best describes an internal auditors purpose in reviewing the organizations existing risk management, control, and governance processes? Select one: a. To ensure that weaknesses in the internal control system are corrected b. To determine whether the processes ensure that the accounting records are correct and that financial statements c. To help determine the nature, timing, and extent of tests necessary to achieve engagement objectives d. To provide reasonable assurance that the processes will enable the organization's objectives and goals are to be met efficiently and economically

d. To provide reasonable assurance that the processes will enable the organization's objectives and goals are to be met efficiently and economically