Chapter 10 Internal Audit

What are the two predominant generalized audit software programs used by internal auditors

CISA and GAS

What does reasonable assurance mean? Why do internal auditors provide reasonable assurance rather than absolute assurance

A level of assurance that is supported by generally accepted auditing procedures and judgements. Can't have absolute assurance because decisions aren't black and white also rarely convinced beyond doubt

What types of analytical procedures are used by internal auditors

Analysis of common size financial statements (vertical analysis) Ratio analysis Trend analysis (horizontal analysis) Analysis of future-oriented information External benchmarking Internal benchmarking

What is the relationship between audit objectives and audit procedures?

Audit procedures are specific task performed by the internal auditor to gather the evidence required to achieve the prescribed audit objectives

What are some common types of working papers

Audit program Budgets Questionnaires Process maps or flowcharts Charts, graphs, diagrams, Agendas Narratives

What are the purposes of internal audit working papers

Compliance with the standards Aid in planning performing audit Facilitate supervision of the audit and review of the work Indicate if the audit objectives are achieved Supports communications Basis for evaluating internal auditors quality assurance Professional development

What are some common types of CAATs

Generalized audit software Utility software Test data Application software tracing and mapping Audit expert systems Continuous auditing

What do internal auditors mean when they refer to the nature, extent, and timing of audit procedures

Nature relates to the types of tests the internal auditor performs to achieve his or her objectives Extent pertains to how much audit evidence the internal auditor must obtain to achieve his or her objectives Timing pertains to when the tests are conducted and the period of time covered by the tests

What are some common characteristics of effective interviews

Professionalism Outstanding interpersonal and oral communication skills and listening skills The capacity to display confidence and command respect without being arrogant An innate curiosity Objectivity

What are the defining characteristics of persuasive audit evidence

Relevant: Is the evidence pertinent to the audit objective? Does it logically support the internal auditor's conclusion or advice? Reliable: Did the evidence come from a credible source? Did the internal auditor directly obtain the evidence? Sufficient: Has the internal auditor obtained enough evidence? Do different but related pieces of evidence corroborate each other?

What are the key characteristics of well-prepared working papers.

Standardized format simplify review streamline audit Complete well organized logical Fixed versions of work papers throw away Each work paper should stand on its own merits

What does professional skepticism mean

The state of mind in which internal auditors take nothing for granted they continuously question what they hear and see and critically assess audit evidence

What is the difference between vouching and tracing

Vouching: Tracking information backward from one document or record to a previously prepared document or record or to a tangible resource Tracing: Tracking information forward from one document record or tangible resource to a subsequently prepared document or record