CH 1: Internal Auditing Overview
True
A major reason for establishing an internal audit activity is to establish effective internal controls.
False
A typical responsibility of an internal auditor is the preparation of a company's financial statements.
True
An example of an assurance service is a compliance engagement.
False
External auditors are required to notify external parties, such as regulators, when they find irregularities or illegal acts; internal auditors are not required to notify third parties about these matters.
?? occasionally
External auditors never perform compliance auditing work.
True
Generally speaking, external auditors are not concerned about operating efficiencies.
False
Independence applies to external auditors, not independent auditors.
True
The proper organizational role of internal auditing is to serve as an independent, objective assurance and consulting activity that adds value to the operations.
False
Internal audit activities involve consulting but not assurance services.
False
Internal auditors are obligated to coordinate with external auditors and external auditors are required to use the work of internal auditors if they are competent.
??
Jim is the new internal auditor for X Co. He was in charge of payroll for X Co. just 10 months ago. It would be an impairment of independence if Jim provided consulting activities
True
Public policy considerations have contributed significantly to the broadened scope of internal auditing.
False
The Sarbanes Oxley Act established the requirement that public companies have an internal audit function.
False
The audit committee should be composed of management directors.
True
The financial audit examines the reliability and integrity of accounting records.
True
The internal auditing profession has advanced primarily because of the increased complexity and sophistication of business operations.
False
The most important benefit of an internal auditing activity to management is assurance that the organization is complying with legal requirements.
False
The most important benefit of the internal auditing activity is assurance that fraudulent activities will be detected.
False
The most important objective of the IIA is to oversee the activities of internal auditors.
False
The person generally responsible for the coordination between external and internal auditors is the chair of the audit committee.
True
The scope of internal auditing includes a systematic approach to evaluating the adequacy and effectiveness of financial statements.
True
The scope of the work of internal auditing should provide reasonable assurance that the system of internal control is effective and efficient.
True
The work of the internal auditor involves evaluating and contributing to the improvement of risk management systems.
