INTERNAL AUDITING HANDBOOK 2ND Edition

WILEY ON-LINE INTERNAL AUDIT RESOURCE

CHAPTER ONE

THE QUIZ

Introduction

To reinforce the assimilation of understanding by audit staff who are using the Handbook as a development resource, this resource “tests” such understanding through simple quizzes. These quizzes can be used as a fun way of checking progress made on each chapter of the Handbook - in the form of multi-choice questions that can be tackled individually or in small teams playing against each other. One way of using this resource is for each person to:

  • work through the on-line session that highlights aspects of chapter one ,
  • read through chapter one of the handbook,
  • attempt the following quiz questions,
  • you may then be able to prepare an IAH2e Chapter One - Certificate of Completion (a template is enclosed with the on-line resource).

Note that the “right answers” are those that are most appropriate within the context of the sentiments of the Internal Auditing Handbook 2nd Edition.

GENERAL

G.1. Insert the missing phrase:

According to Neil Cowan, The late twentieth century saw virtually every type of organisation suffer to some extent from poor management decisions, unethical corporate behaviour, fraud and other …………………….

a. Unacceptable performance measures

b. Unacceptable staffing

c. Unacceptable business practices

d. Unacceptable financial results

CHAPTER ONE

1.1. Insert the missing phrase:

Moreover, the internal auditor also works with and alongside busy managers to help them understand the task of …………………….

a. managing their staff to best effect.

b. identifying and managing risks to their operations.

c. helping the auditor get their job done.

d. reducing their budgets wherever possible.

1.2. The Chief Audit Executive is defined by the Institute of Internal Auditors (IIA) as:

a. The officer who reports at every audit committee meeting.

b. The most senior person responsible for promoting risk management in the organisation.

c. The most qualified internal auditor in post.

d. Top position within the organisation responsible for the internal audit activities.

1.3. Which is the correct IIA definition of internal auditing:

a. Internal auditing is an independent, objective assurance and consulting activity designed to add value and improve an organisation's operations.

b. Internal auditing is an independent, assurance and consulting activity designed to add value and improve an organisation's operations.

c. Internal auditing is an independent, objective assurance and consulting activity designed to add value to an organisation's operations.

d. Internal auditing is an independent, objective assurance and consulting service designed to add value or improve an organisation's operations.

1.4. Which of the following is not an IIA Attribute Standard:

a. Purpose, Authority, and Responsibility

b. Independence and Objectivity

c. Professionalism and conduct

d. Proficiency and Due Professional Care

e. Quality Assurance and Improvement Program

1.5. Which of the following is not an IIA Performance Standard:

a. Managing the Internal Audit Activity

b. Nature of Work

c. Engagement Planning

d. Performing the Engagement

e. Documenting the audit

f. Communicating results

g. Monitoring Progress

h. Management's Acceptance of Risks

1.6. Insert the missing phrase:

The infamous “…………” reigned supreme indicating that a document was deemed

correct and above board. Internal control was seen as internal check and management

was presented with audit reports listing the sometimes huge number of errors found by

internal audit.

a. audit nose

b. audit certificate

c. audit sign-off

d. audit stamp

1.7. Which is the odd one out:

Audit consisted mainly of checking; with the probity visits tending to centre on:

a. cash income

b. stocks

c. purchases

d. petty cash

e. staff complaints

f. stamps

g. revenue contracts

h. and other minor accounting functions.

1.8. Insert the missing phrase:

Internal audit was seen as an integral component of the………………… designed to double-check accounting transactions. The idea was to re-check as many items as possible so as to provide this continuous audit.

a. operational procedures

b. internal checking procedures

c. budgetary control

d. performance measurement

1.9. Insert the missing phrase:

Moreover, most internal auditors assumed a “……..” mentality where their greatest achievements resided in the task of finding errors, abuse and/or neglect by managers and their staff.

a. You’re nicked

b. Book-em

c. Hands-up

d. Gotcha

1.10. Insert the missing phrase:

The importance of sound organisational systems came to a fore in the USA where the Foreign Corrupt Practices Act passed in ……. stated that an organisation’s management were culpable for any illegal payments made by the organisation even where they claimed they had no knowledge of the payments.

a. 1997

b. 1987

c. 1956

d. 2003

1.11. Which is the most appropriate statement:

a. The ability to understand and evaluate complicated behaviour patterns of employees allows audit to assume wide scope.

b. The ability to understand and evaluate complicated systems of managerial and operational controls allows audit to assume wide scope.

c. The ability to understand and evaluate complicated accounting records allows audit to assume wide scope.

d. The ability to understand and evaluate complicated systems of compliance routines allows audit to assume wide scope.

1.12. Which is the most appropriate statement:

a. Many internal audit shops have now moved into risk based auditing where the audit service is driven by the way the organisation perceives controls.

b. Many internal audit shops have now moved into risk based auditing where the audit service is driven by the way the organisation perceives compliance.

c. Many internal audit shops have now moved into risk based auditing where the audit service is driven by the way the organisation perceives its auditors.

d. Many internal audit shops have now moved into risk based auditing where the audit service is driven by the way the organisation perceives and manages risk.

1.13. Which is the odd one out:

Legislation is an important component in the development of internal auditing:

a. It may alter the audit role by providing additional work.

b. It may lead to incompetent audit staff.

c. It may bring into the frame competitors for the current audit contract.

d. It may impact the status of internal auditing, e.g. any moves towards mandatory audit committees or for that matter mandatory internal audit.

1.14. Insert the missing phrase:

A worthwhile profession is based on clear principles, and not just fancy………...

a. standards.

b. auditors.

c. jargon.

d. reports.

CHAPTER ONE - QUIZ

MARKING FORM: YOUR RESPONSE

Question / Your Answer / Correct
Answer / Tick if your answer is correct
G.1
1.1
1.2
1.3
1.4
1.5
1.6
1.7
1.8
1.9
1.10
1.11
1.12
1.13
1.14
Total of number of correct answers:
Divided by: / divided by 14
times 100
Your Score: / %

CHAPTER ONE QUIZ

ANSWER GUIDE

MOST APPROPRIATE RESPONSE

Answers

General:

G.1.(c) - see Forward, para 3

Chapter One:

1.1.(b) - see page 1

1.2.(d) - see page 1

1.3.(a) - see page 2

1.4.(c) - see page 2-3

1.5.(e) - see page 3

1.6.(d) - see page 8

1.7.(e) - see page 9

1.8.(b) - see page 10

1.9.(d) - see page 11

1.10(a) - see page 11

1.11.(b) - see page 12

1.12.(d) - see page 12

1.13.(b) - see page 18

1.14.(c ) - see page 20

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