Audit Assurance Exam Questions Ch19 - Digital Test Bank | Accounting Info Systems 1e by Arline A. Savage. DOCX document preview.
Accounting Information Systems, 1e (Savage)
Chapter 19 Audit Assurance
1) Historically, auditors were divided into groups based on their expertise: operational or business auditors, financial auditors, and information technology (IT) auditors. Which of the following would be performed by an IT auditor?
A) Cybersecurity
B) Financial reporting
C) Claims processing
D) Human resources
Diff: 1
Learning Objective: 19.1 Compare and contrast internal and external audit functions.
Section Reference: Audit Specializations
AACSB: None
Bloom's: Comprehension
AICPA: AC: Risk Assessment, Analysis, and Management
2) Historically, auditors were divided into groups based on their expertise: operational or business auditors, financial auditors, and information technology (IT) auditors. Which of the following would be performed by an IT auditor?
A) Financial reporting
B) Backups and storage
C) Claims processing
D) Human resources
Diff: 1
Learning Objective: 19.1 Compare and contrast internal and external audit functions.
Section Reference: Audit Specializations
AACSB: None
Bloom's: Comprehension
AICPA: AC: Risk Assessment, Analysis, and Management
3) Historically, auditors were divided into groups based on their expertise: operational or business auditors, financial auditors, and information technology (IT) auditors. Which of the following would be performed by an IT auditor?
A) Financial reporting
B) Claims processing
C) Network infrastructure
D) Human resources
Diff: 1
Learning Objective: 19.1 Compare and contrast internal and external audit functions.
Section Reference: Audit Specializations
AACSB: None
Bloom's: Comprehension
AICPA: AC: Risk Assessment, Analysis, and Management
4) Historically, auditors were divided into groups based on their expertise: operational or business auditors, financial auditors, and information technology (IT) auditors. Which of the following would be performed by an IT auditor?
A) Financial reporting
B) Claims processing
C) Human resources
D) Security administration
Diff: 1
Learning Objective: 19.1 Compare and contrast internal and external audit functions.
Section Reference: Audit Specializations
AACSB: None
Bloom's: Comprehension
AICPA: AC: Risk Assessment, Analysis, and Management
5) Historically, auditors were divided into groups based on their expertise: operational or business auditors, financial auditors, and information technology (IT) auditors. Which of the following would be performed by a financial auditor?
A) Financial reporting
B) Claims processing
C) Network infrastructure
D) Human resources
Diff: 1
Learning Objective: 19.1 Compare and contrast internal and external audit functions.
Section Reference: Audit Specializations
AACSB: None
Bloom's: Comprehension
AICPA: AC: Risk Assessment, Analysis, and Management
6) Historically, auditors were divided into groups based on their expertise: operational or business auditors, financial auditors, and information technology (IT) auditors. Which of the following would be performed by a financial auditor?
A) Claims processing
B) Corporate tax
C) Human resources
D) Security administration
Diff: 1
Learning Objective: 19.1 Compare and contrast internal and external audit functions.
Section Reference: Audit Specializations
AACSB: None
Bloom's: Comprehension
AICPA: AC: Risk Assessment, Analysis, and Management
7) Historically, auditors were divided into groups based on their expertise: operational or business auditors, financial auditors, and information technology (IT) auditors. Which of the following would be performed by a financial auditor?
A) Claims processing
B) Network infrastructure
C) Accounts payable
D) Human resources
Diff: 1
Learning Objective: 19.1 Compare and contrast internal and external audit functions.
Section Reference: Audit Specializations
AACSB: None
Bloom's: Comprehension
AICPA: AC: Risk Assessment, Analysis, and Management
8) Historically, auditors were divided into groups based on their expertise: operational or business auditors, financial auditors, and information technology (IT) auditors. Which of the following would be performed by a financial auditor?
A) Claims processing
B) Human resources
C) Security administration
D) Payroll
Diff: 1
Learning Objective: 19.1 Compare and contrast internal and external audit functions.
Section Reference: Audit Specializations
AACSB: None
Bloom's: Comprehension
AICPA: AC: Risk Assessment, Analysis, and Management
9) Historically, auditors were divided into groups based on their expertise: operational or business auditors, financial auditors, and information technology (IT) auditors. Which of the following would be performed by an operational or business auditor?
A) Claims processing
B) Network infrastructure
C) Accounts payable
D) Change management
Diff: 1
Learning Objective: 19.1 Compare and contrast internal and external audit functions.
Section Reference: Audit Specializations
AACSB: None
Bloom's: Comprehension
AICPA: AC: Risk Assessment, Analysis, and Management
10) Historically, auditors were divided into groups based on their expertise: operational or business auditors, financial auditors, and information technology (IT) auditors. Which of the following would be performed by an operational or business auditor?
A) Security administration
B) Corporate investments
C) Payroll
D) Disaster recovery
Diff: 1
Learning Objective: 19.1 Compare and contrast internal and external audit functions.
Section Reference: Audit Specializations
AACSB: None
Bloom's: Comprehension
AICPA: AC: Risk Assessment, Analysis, and Management
11) Historically, auditors were divided into groups based on their expertise: operational or business auditors, financial auditors, and information technology (IT) auditors. Which of the following would be performed by an operational or business auditor?
A) Network infrastructure
B) Accounts payable
C) Sales and distribution
D) Change management
Diff: 1
Learning Objective: 19.1 Compare and contrast internal and external audit functions.
Section Reference: Audit Specializations
AACSB: None
Bloom's: Comprehension
AICPA: AC: Risk Assessment, Analysis, and Management
12) Historically, auditors were divided into groups based on their expertise: operational or business auditors, financial auditors, and information technology (IT) auditors. Which of the following would be performed by an operational or business auditor?
A) Security administration
B) Payroll
C) Disaster recovery
D) Human resources
Diff: 1
Learning Objective: 19.1 Compare and contrast internal and external audit functions.
Section Reference: Audit Specializations
AACSB: None
Bloom's: Comprehension
AICPA: AC: Risk Assessment, Analysis, and Management
13) The Institute of Internal Auditors (IIA) updated their three lines of defense model in 2020 to reflect the need for aligned assurance from various areas of a company. Which of the following is the best definition of aligned assurance?
A) Aligned assurance focuses on ensuring that the second and third lines of defense are working cohesively to provide appropriate coverage over a company's risks.
B) Aligned assurance is the systematic and independent review of data, information, records, and operations of a business to provide assurance of the effectiveness of internal controls and efficiency of processes.
C) Aligned assurance evaluates whether the financial statements of the audited company are free from material misstatements and are presented in accordance with generally accepted accounting standards.
D) Aligned assurance employs rigorous independence checks to ensure that their opinions will be unbiased and that they do not have inappropriate ties to the client.
Diff: 1
Learning Objective: 19.1 Compare and contrast internal and external audit functions.
Section Reference: External Auditors
AACSB: None
Bloom's: Comprehension
AICPA: AC: Risk Assessment, Analysis, and Management
14) The Institute of Internal Auditors (IIA) updated their three lines of defense model in 2020 to reflect the need for aligned assurance from various areas of a company. Which of the following is the best definition of internal auditing?
A) Auditing focuses on ensuring that the second and third lines of defense are working cohesively to provide appropriate coverage over a company's risks.
B) Auditing is the systematic and independent review of data, information, records, and operations of a business to provide assurance of the effectiveness of internal controls and efficiency of processes.
C) Auditing evaluates whether the financial statements of the audited company are free from material misstatements and are presented in accordance with accounting standards.
D) Auditing employs rigorous independence checks to ensure that their opinions will be unbiased and that they do not have inappropriate ties to the client.
Diff: 2
Learning Objective: 19.1 Compare and contrast internal and external audit functions.
Section Reference: External Auditors
AACSB: None
Bloom's: Application
AICPA: AC: Risk Assessment, Analysis, and Management
15) The Institute of Internal Auditors (IIA) updated their three lines of defense model in 2020 to reflect the need for aligned assurance from various areas of a company. Which of the following is the best definition of external auditors?
A) External auditors focus on ensuring that the second and third lines of defense are working cohesively to provide appropriate coverage over a company's risks.
B) External auditors provide the systematic and independent review of data, information, records, and operations of a business to provide assurance of the effectiveness of internal controls and efficiency of processes.
C) External auditors evaluate whether the financial statements of the audited company are free from material misstatements and are presented in accordance with accounting standards.
D) External auditors employ rigorous independence checks to ensure that their opinions will be unbiased and that they do not have inappropriate ties to the client.
Diff: 2
Learning Objective: 19.1 Compare and contrast internal and external audit functions.
Section Reference: External Auditors
AACSB: None
Bloom's: Application
AICPA: AC: Risk Assessment, Analysis, and Management
16) The Institute of Internal Auditors (IIA) updated their three lines of defense model in 2020 to reflect the need for aligned assurance from various areas of a company. Which of the following is the best definition of internal auditors?
A) Internal auditors focus on ensuring that the second and third lines of defense are working cohesively to provide appropriate coverage over a company's risks.
B) Internal auditors provide the systematic and independent review of data, information, records, and operations of a business to provide assurance of the effectiveness of internal controls and efficiency of processes.
C) Internal auditors evaluate whether the financial statements of the audited company are free from material misstatements and are presented in accordance with generally accepted accounting standards.
D) Internal auditors employ rigorous independence checks to ensure that their opinions will be unbiased and that they do not have inappropriate ties to the client.
Diff: 2
Learning Objective: 19.1 Compare and contrast internal and external audit functions.
Section Reference: External Auditors
AACSB: None
Bloom's: Application
AICPA: AC: Risk Assessment, Analysis, and Management
17) The Institute of Internal Auditors (IIA) updated their three lines of defense model in 2020 to reflect the need for aligned assurance from various areas of a company.
What does A represent in the IIA's Three Lines Model?
A) Governing Body
B) Management
C) Internal Audit
D) External Assurance Providers
Diff: 1
Learning Objective: 19.1 Compare and contrast internal and external audit functions.
Section Reference: External Auditors
AACSB: None
Bloom's: Comprehension
AICPA: AC: Risk Assessment, Analysis, and Management
18) The Institute of Internal Auditors (IIA) updated their three lines of defense model in 2020 to reflect the need for aligned assurance from various areas of a company.
What does B represent in the IIA's Three Lines Model?
A) Governing Body
B) Management
C) Internal Audit
D) External Assurance Providers
Diff: 1
Learning Objective: 19.1 Compare and contrast internal and external audit functions.
Section Reference: External Auditors
AACSB: None
Bloom's: Comprehension
AICPA: AC: Risk Assessment, Analysis, and Management
19) The Institute of Internal Auditors (IIA) updated their three lines of defense model in 2020 to reflect the need for aligned assurance from various areas of a company.
What does C represent in the IIA's Three Lines Model?
A) Governing Body
B) Management
C) Internal Audit
D) External Assurance Providers
Diff: 1
Learning Objective: 19.1 Compare and contrast internal and external audit functions.
Section Reference: External Auditors
AACSB: None
Bloom's: Comprehension
AICPA: AC: Risk Assessment, Analysis, and Management
20) The Institute of Internal Auditors (IIA) updated their three lines of defense model in 2020 to reflect the need for aligned assurance from various areas of a company.
What does D represent in the IIA's Three Lines Model?
A) Governing Body
B) Management
C) Internal Audit
D) External Assurance Providers
Diff: 1
Learning Objective: 19.1 Compare and contrast internal and external audit functions.
Section Reference: External Auditors
AACSB: None
Bloom's: Comprehension
AICPA: AC: Risk Assessment, Analysis, and Management
21) Who prepares the results of the audit engagement as presented in the independent audit report regarding the financial statements?
A) External auditors
B) Internal auditors
C) Management
D) Audit committee
Diff: 1
Learning Objective: 19.1 Compare and contrast internal and external audit functions.
Section Reference: External Auditors
AACSB: None
Bloom's: Knowledge
AICPA: AC: Reporting
22) Which part of the external audit report typically presents the auditors' conclusions?
A) Report on the Financial Statements
B) Management's Responsibility for the Financial Statements
C) Auditor's Responsibility
D) Opinion
Diff: 1
Learning Objective: 19.1 Compare and contrast internal and external audit functions.
Section Reference: External Auditors
AACSB: None
Bloom's: Knowledge
AICPA: AC: Reporting
23) An employee of which of the following companies would likely serve as an external auditor?
A) PwC
B) Coca-Cola
C) Disney
D) Netflix
Diff: 1
Learning Objective: 19.1 Compare and contrast internal and external audit functions.
Section Reference: External Auditors
AACSB: None
Bloom's: Knowledge
AICPA: AC: Risk Assessment, Analysis, and Management
24) An employee of which of the following companies would likely serve as an internal auditor?
A) PwC
B) Coca-Cola
C) Deloitte
D) EY
Diff: 1
Learning Objective: 19.1 Compare and contrast internal and external audit functions.
Section Reference: External Auditors
AACSB: None
Bloom's: Knowledge
AICPA: AC: Risk Assessment, Analysis, and Management
25) What is the first step an internal audit department takes?
A) Create an audit plan
B) Create an agile audit
C) Create a rolling audit plan
D) Change management
Diff: 1
Learning Objective: 19.2 Describe the stages of an internal audit.
Section Reference: The Internal Audit Process
AACSB: None
Bloom's: Knowledge
AICPA: AC: Risk Assessment, Analysis, and Management
26) Many companies perform the audit planning process annually and create a 12-month audit plan. Another method is an increasingly popular methodology that involves working in shorter sprints and making changes as needed. What is this auditing approach called?
A) Sprint auditing
B) Agile auditing
C) External auditing
D) Waterfall auditing
Diff: 1
Learning Objective: 19.2 Describe the stages of an internal audit.
Section Reference: The Internal Audit Process
AACSB: None
Bloom's: Knowledge
AICPA: AC: Risk Assessment, Analysis, and Management
27) Many companies perform the audit planning process annually and create a ________-month audit plan.
A) 3
B) 6
C) 12
D) 24
Diff: 1
Learning Objective: 19.2 Describe the stages of an internal audit.
Section Reference: The Internal Audit Process
AACSB: None
Bloom's: Knowledge
AICPA: AC: Risk Assessment, Analysis, and Management
28) The audit risk assessment determines which audits the department recommends for the next period. The internal audit department presents its recommendations to the ________ for approval.
A) Nominating committee
B) Finance committee
C) Executive committee
D) Audit committee
Diff: 1
Learning Objective: 19.2 Describe the stages of an internal audit.
Section Reference: The Internal Audit Process
AACSB: None
Bloom's: Knowledge
AICPA: AC: Risk Assessment, Analysis, and Management
29) The five stages of an audit include important audit activities and deliverables.
What is Stage A?
A) Planning
B) Fieldwork
C) Wrap-up
D) Reporting
Diff: 1
Learning Objective: 19.2 Describe the stages of an internal audit.
Section Reference: The Internal Audit Process
AACSB: None
Bloom's: Comprehension
AICPA: AC: Risk Assessment, Analysis, and Management
30) The five stages of an audit include important audit activities and deliverables.
What is Stage B?
A) Planning
B) Fieldwork
C) Wrap-up
D) Reporting
Diff: 1
Learning Objective: 19.2 Describe the stages of an internal audit.
Section Reference: The Internal Audit Process
AACSB: None
Bloom's: Comprehension
AICPA: AC: Risk Assessment, Analysis, and Management
31) The five stages of an audit include important audit activities and deliverables.
What is Stage C?
A) Planning
B) Fieldwork
C) Wrap-up
D) Reporting
Diff: 1
Learning Objective: 19.2 Describe the stages of an internal audit.
Section Reference: The Internal Audit Process
AACSB: None
Bloom's: Comprehension
AICPA: AC: Risk Assessment, Analysis, and Management
32) The five stages of an audit include important audit activities and deliverables.
What is Stage D?
A) Planning
B) Fieldwork
C) Wrap-up
D) Reporting
Diff: 1
Learning Objective: 19.2 Describe the stages of an internal audit.
Section Reference: The Internal Audit Process
AACSB: None
Bloom's: Comprehension
AICPA: AC: Risk Assessment, Analysis, and Management
33) The five stages of an audit include important audit activities and deliverables.
What is Stage E?
A) Follow-up
B) Fieldwork
C) Wrap-up
D) Reporting
Diff: 1
Learning Objective: 19.2 Describe the stages of an internal audit.
Section Reference: The Internal Audit Process
AACSB: None
Bloom's: Comprehension
AICPA: AC: Risk Assessment, Analysis, and Management
34) The five stages of an audit include important audit activities and deliverables. Which of the following is the audit stage where the scoping document is delivered?
A) Planning
B) Fieldwork
C) Wrap-up
D) Reporting
Diff: 1
Learning Objective: 19.2 Describe the stages of an internal audit.
Section Reference: The Internal Audit Process
AACSB: None
Bloom's: Comprehension
AICPA: AC: Risk Assessment, Analysis, and Management
35) The five stages of an audit include important audit activities and deliverables. Which of the following is the audit stage where the audit canvas is delivered?
A) Planning
B) Fieldwork
C) Wrap-up
D) Reporting
Diff: 1
Learning Objective: 19.2 Describe the stages of an internal audit.
Section Reference: The Internal Audit Process
AACSB: None
Bloom's: Comprehension
AICPA: AC: Risk Assessment, Analysis, and Management
36) The five stages of an audit include important audit activities and deliverables. Which of the following is the audit stage where the documentation request is delivered?
A) Planning
B) Fieldwork
C) Wrap-up
D) Reporting
Diff: 1
Learning Objective: 19.2 Describe the stages of an internal audit.
Section Reference: The Internal Audit Process
AACSB: None
Bloom's: Comprehension
AICPA: AC: Risk Assessment, Analysis, and Management
37) The five stages of an audit include important audit activities and deliverables. Which of the following is the audit stage where the sample selection is delivered?
A) Planning
B) Fieldwork
C) Wrap-up
D) Reporting
Diff: 1
Learning Objective: 19.2 Describe the stages of an internal audit.
Section Reference: The Internal Audit Process
AACSB: None
Bloom's: Comprehension
AICPA: AC: Risk Assessment, Analysis, and Management
38) The five stages of an audit include important audit activities and deliverables. Which of the following is the audit stage where the preliminary observations are delivered?
A) Planning
B) Fieldwork
C) Wrap-up
D) Reporting
Diff: 1
Learning Objective: 19.2 Describe the stages of an internal audit.
Section Reference: The Internal Audit Process
AACSB: None
Bloom's: Comprehension
AICPA: AC: Risk Assessment, Analysis, and Management
39) The five stages of an audit include important audit activities and deliverables. Which of the following is the audit stage where the workpapers are delivered?
A) Planning
B) Fieldwork
C) Wrap-up
D) Reporting
Diff: 1
Learning Objective: 19.2 Describe the stages of an internal audit.
Section Reference: The Internal Audit Process
AACSB: None
Bloom's: Comprehension
AICPA: AC: Risk Assessment, Analysis, and Management
40) The five stages of an audit include important audit activities and deliverables. Which of the following is the audit stage where the draft audit report is delivered?
A) Planning
B) Fieldwork
C) Wrap-up
D) Reporting
Diff: 1
Learning Objective: 19.2 Describe the stages of an internal audit.
Section Reference: The Internal Audit Process
AACSB: None
Bloom's: Comprehension
AICPA: AC: Risk Assessment, Analysis, and Management
41) The five stages of an audit include important audit activities and deliverables. Which of the following is the audit stage where the final audit report is delivered?
A) Planning
B) Fieldwork
C) Wrap-up
D) Reporting
Diff: 1
Learning Objective: 19.2 Describe the stages of an internal audit.
Section Reference: The Internal Audit Process
AACSB: None
Bloom's: Comprehension
AICPA: AC: Risk Assessment, Analysis, and Management
42) The five stages of an audit include important audit activities and deliverables. Which of the following is the audit stage where the management action plan is delivered?
A) Planning
B) Fieldwork
C) Wrap-up
D) Reporting
Diff: 1
Learning Objective: 19.2 Describe the stages of an internal audit.
Section Reference: The Internal Audit Process
AACSB: None
Bloom's: Comprehension
AICPA: AC: Risk Assessment, Analysis, and Management
43) The five stages of an audit include important audit activities and deliverables. Which of the following is the audit stage where the updated management action plan is delivered?
A) Follow-up
B) Fieldwork
C) Wrap-up
D) Reporting
Diff: 1
Learning Objective: 19.2 Describe the stages of an internal audit.
Section Reference: The Internal Audit Process
AACSB: None
Bloom's: Comprehension
AICPA: AC: Risk Assessment, Analysis, and Management
44) Which of the following is the best definition of a scoping document?
A) A scoping document describes the areas of the process that are subject to audit.
B) A scoping document includes key audit planning information.
C) A scoping document is an Agile version of a planning memo.
D) A scoping document is an interview where auditees explain their daily functions to the auditor.
Diff: 1
Learning Objective: 19.2 Describe the stages of an internal audit.
Section Reference: Planning an Audit
AACSB: None
Bloom's: Comprehension
AICPA: AC: Risk Assessment, Analysis, and Management
45) Which of the following is the best definition of an audit planning memo?
A) An audit planning memo describes the areas of the process that are subject to audit.
B) An audit planning memo includes key audit planning information.
C) An audit planning memo is an Agile version of a planning memo.
D) An audit planning memo is an interview where auditees explain their daily functions to the auditor.
Diff: 1
Learning Objective: 19.2 Describe the stages of an internal audit.
Section Reference: Planning an Audit
AACSB: None
Bloom's: Knowledge
AICPA: AC: Risk Assessment, Analysis, and Management
46) Which of the following is the best definition of an audit canvas?
A) An audit canvas describes the areas of the process that are subject to audit.
B) An audit canvas includes key audit planning information.
C) An audit canvas is an Agile version of a planning memo.
D) An audit canvas is an interview where auditees explain their daily functions to the auditor.
Diff: 1
Learning Objective: 19.2 Describe the stages of an internal audit.
Section Reference: Planning an Audit
AACSB: None
Bloom's: Knowledge
AICPA: AC: Risk Assessment, Analysis, and Management
47) Just as a business does not have the resources to mitigate all its risks, internal audit does not have the resources to test every risk and the controls implemented to address each risk. What helps a company prioritize the risks it faces?
A) Risk scores
B) Audit scores
C) Planning scores
D) Scoping scores
Diff: 2
Learning Objective: 19.2 Describe the stages of an internal audit.
Section Reference: Planning an Audit
AACSB: None
Bloom's: Application
AICPA: AC: Risk Assessment, Analysis, and Management
48) The plans of the audit team, including the audit planning memo, are presented during what event?
A) The audit wrap-up meeting
B) The audit kickoff meeting
C) The audit fieldwork
D) The audit follow-up meeting
Diff: 1
Learning Objective: 19.2 Describe the stages of an internal audit.
Section Reference: Planning an Audit
AACSB: None
Bloom's: Comprehension
AICPA: AC: Risk Assessment, Analysis, and Management
49) Internal audit's primary purpose is to provide independent assurance that a company's ________, internal controls, and governance processes are effective.
A) Risk management
B) Audit canvas
C) Workpapers
D) Management action plan
Diff: 1
Learning Objective: 19.3 Summarize the internal audit testing process.
Section Reference: Introduction
AACSB: None
Bloom's: Knowledge
AICPA: AC: Risk Assessment, Analysis, and Management
50) Internal audit's primary purpose is to provide independent assurance that a company's risk management, ________, and governance processes are effective.
A) Audit canvas
B) Internal controls
C) Workpapers
D) Management action plan
Diff: 1
Learning Objective: 19.3 Summarize the internal audit testing process.
Section Reference: Introduction
AACSB: None
Bloom's: Knowledge
AICPA: AC: Risk Assessment, Analysis, and Management
51) Internal audit's primary purpose is to provide independent assurance that a company's risk management, internal controls, and ________ are effective.
A) Audit canvas
B) Workpapers
C) Governance processes
D) Management action plan
Diff: 1
Learning Objective: 19.3 Summarize the internal audit testing process.
Section Reference: Introduction
AACSB: None
Bloom's: Knowledge
AICPA: AC: Risk Assessment, Analysis, and Management
52) What is the audit stage called that is focused on assessing the adequacy of internal controls, compliance, and business processes, including the performance of testing transactions, data, and other procedures necessary to accomplish the audit objectives?
A) Audit fieldwork
B) Information gathering
C) Process walkthrough
D) Design effectiveness
Diff: 1
Learning Objective: 19.3 Summarize the internal audit testing process.
Section Reference: Introduction
AACSB: None
Bloom's: Knowledge
AICPA: AC: Risk Assessment, Analysis, and Management
53) What is the first step in fieldwork called?
A) Audit fieldwork
B) Information gathering
C) Process walkthrough
D) Design effectiveness
Diff: 1
Learning Objective: 19.3 Summarize the internal audit testing process.
Section Reference: Information Gathering
AACSB: None
Bloom's: Knowledge
AICPA: AC: Risk Assessment, Analysis, and Management
54) What is an interview where auditees explain their daily job functions to the auditor called?
A) Audit fieldwork
B) Information gathering
C) Process walkthrough
D) Design effectiveness
Diff: 1
Learning Objective: 19.3 Summarize the internal audit testing process.
Section Reference: Information Gathering
AACSB: None
Bloom's: Knowledge
AICPA: AC: Risk Assessment, Analysis, and Management
55) What determines whether a control, if operated as prescribed, meets the company's control objectives and affectively prevents or detects errors or fraud?
A) Audit fieldwork
B) Information gathering
C) Process walkthrough
D) Design effectiveness
Diff: 1
Learning Objective: 19.3 Summarize the internal audit testing process.
Section Reference: Tests of Controls
AACSB: None
Bloom's: Knowledge
AICPA: AC: Risk Assessment, Analysis, and Management
56) What determines whether a control is operated as designed by a person with appropriate authority and training to perform the control?
A) Operating effectiveness
B) Information gathering
C) Process walkthrough
D) Design effectiveness
Diff: 1
Learning Objective: 19.3 Summarize the internal audit testing process.
Section Reference: Tests of Controls
AACSB: None
Bloom's: Knowledge
AICPA: AC: Risk Assessment, Analysis, and Management
57) Which of the following is the best definition of inquiry?
A) Asking questions of key employees
B) Watching key employees perform the control
C) Reviewing documentation such as policies and procedures
D) Independently re-creating a control situation, often through data analytics
Diff: 1
Learning Objective: 19.3 Summarize the internal audit testing process.
Section Reference: Tests of Controls
AACSB: None
Bloom's: Comprehension
AICPA: AC: Risk Assessment, Analysis, and Management
58) Which of the following is the best definition of observation?
A) Asking questions of key employees
B) Watching key employees perform the control
C) Reviewing documentation such as policies and procedures
D) Independently re-creating a control situation, often through data analytics
Diff: 1
Learning Objective: 19.3 Summarize the internal audit testing process.
Section Reference: Tests of Controls
AACSB: None
Bloom's: Comprehension
AICPA: AC: Risk Assessment, Analysis, and Management
59) Which of the following is the best definition of inspection?
A) Asking questions of key employees
B) Watching key employees perform the control
C) Reviewing documentation such as policies and procedures
D) Independently re-creating a control situation, often through data analytics
Diff: 1
Learning Objective: 19.3 Summarize the internal audit testing process.
Section Reference: Tests of Controls
AACSB: None
Bloom's: Comprehension
AICPA: AC: Risk Assessment, Analysis, and Management
60) Which of the following is the best definition of reperformance?
A) Asking questions of key employees
B) Watching key employees perform the control
C) Reviewing documentation such as policies and procedures
D) Independently re-creating a control situation, often through data analytics
Diff: 1
Learning Objective: 19.3 Summarize the internal audit testing process.
Section Reference: Tests of Controls
AACSB: None
Bloom's: Comprehension
AICPA: AC: Risk Assessment, Analysis, and Management
61) If you are asking questions of key employees, which operating effectiveness test are you performing?
A) Inquiry
B) Observation
C) Inspection
D) Reperformance
Diff: 1
Learning Objective: 19.3 Summarize the internal audit testing process.
Section Reference: Tests of Controls
AACSB: None
Bloom's: Comprehension
AICPA: AC: Risk Assessment, Analysis, and Management
62) If you are watching key employees perform the control, which operating effectiveness test are you performing?
A) Inquiry
B) Observation
C) Inspection
D) Reperformance
Diff: 1
Learning Objective: 19.3 Summarize the internal audit testing process.
Section Reference: Tests of Controls
AACSB: None
Bloom's: Comprehension
AICPA: AC: Risk Assessment, Analysis, and Management
63) If you are reviewing documentation, such as policies and procedures, which operating effectiveness test are you performing?
A) Inquiry
B) Observation
C) Inspection
D) Reperformance
Diff: 1
Learning Objective: 19.3 Summarize the internal audit testing process.
Section Reference: Tests of Controls
AACSB: None
Bloom's: Comprehension
AICPA: AC: Risk Assessment, Analysis, and Management
64) If you are independently re-creating a control situation, which operating effectiveness test are you performing?
A) Inquiry
B) Observation
C) Inspection
D) Reperformance
Diff: 1
Learning Objective: 19.3 Summarize the internal audit testing process.
Section Reference: Tests of Controls
AACSB: None
Bloom's: Comprehension
AICPA: AC: Risk Assessment, Analysis, and Management
65) Unlike design effectiveness, operating effectiveness is tested through what?
A) Inquiry
B) Observation
C) Inspection
D) Reperformance
Diff: 1
Learning Objective: 19.3 Summarize the internal audit testing process.
Section Reference: Tests of Controls
AACSB: None
Bloom's: Knowledge
AICPA: AC: Risk Assessment, Analysis, and Management
66) What are used to determine if material misstatements exist in the underlying data that is used to create the financial statements?
A) Substantive procedures
B) Document request
C) Design effectiveness
D) Operating effectiveness
Diff: 1
Learning Objective: 19.3 Summarize the internal audit testing process.
Section Reference: Substantive Procedures
AACSB: None
Bloom's: Knowledge
AICPA: AC: Risk Assessment, Analysis, and Management
67) What is a formal list of all documentation needed for an audit?
A) Substantive procedures
B) Document request
C) Design effectiveness
D) Operating effectiveness
Diff: 1
Learning Objective: 19.3 Summarize the internal audit testing process.
Section Reference: Substantive Procedures
AACSB: None
Bloom's: Knowledge
AICPA: AC: Risk Assessment, Analysis, and Management
68) What Excel function would you use if you want to split a column into multiple columns using a specified delimiter to divide the column?
A) Text to Columns
B) LEFT
C) CONCAT
D) SUM
Diff: 1
Learning Objective: 19.3 Summarize the internal audit testing process.
Section Reference: Substantive Procedures
AACSB: None
Bloom's: Knowledge
AICPA: AC: Risk Assessment, Analysis, and Management
69) What Excel function would you use if you want to return a specified number of characters beginning at the left of the column?
A) Text to Columns
B) LEFT
C) CONCAT
D) SUM
Diff: 1
Learning Objective: 19.3 Summarize the internal audit testing process.
Section Reference: Substantive Procedures
AACSB: None
Bloom's: Knowledge
AICPA: AC: Risk Assessment, Analysis, and Management
70) What Excel function would you use if you want to combine two or more columns into one new column?
A) Text to Columns
B) LEFT
C) CONCAT
D) SUM
Diff: 1
Learning Objective: 19.3 Summarize the internal audit testing process.
Section Reference: Substantive Procedures
AACSB: None
Bloom's: Knowledge
AICPA: AC: Risk Assessment, Analysis, and Management
71) ________ is the core of an audit engagement.
A) Fieldwork
B) Wrap-up
C) Reporting
D) Planning
Diff: 1
Learning Objective: 19.4 Summarize the outcome of control testing.
Section Reference: Introduction
AACSB: None
Bloom's: Knowledge
AICPA: AC: Risk Assessment, Analysis, and Management
72) The ________ gathered about the business and internal controls during the audit engagement must be communicated so that management can implement suggestions and address shortcomings.
A) fieldwork
B) valuable information
C) reporting
D) planning
Diff: 1
Learning Objective: 19.4 Summarize the outcome of control testing.
Section Reference: Introduction
AACSB: None
Bloom's: Knowledge
AICPA: AC: Risk Assessment, Analysis, and Management
73) The valuable information gathered about the business and internal controls during the audit engagement must be communicated so that management can
A) ignore and decide to change auditors.
B) instruct the auditors to implement the changes.
C) implement suggestions and address shortcomings.
D) plan for the next audit engagement.
Diff: 1
Learning Objective: 19.4 Summarize the outcome of control testing.
Section Reference: Introduction
AACSB: None
Bloom's: Knowledge
AICPA: AC: Risk Assessment, Analysis, and Management
74) What is the first stage after fieldwork, where auditors complete their workpapers and draft an audit report to share with key stakeholders?
A) Fieldwork
B) Wrap-up
C) Reporting
D) Planning
Diff: 1
Learning Objective: 19.4 Summarize the outcome of control testing.
Section Reference: Wrap-up
AACSB: None
Bloom's: Knowledge
AICPA: AC: Risk Assessment, Analysis, and Management
75) During the wrap-up stage of an audit, what are the notes called that are compiled into formal documentation capturing the results of the control testing performed?
A) Audit findings
B) Wrap-up
C) Audit workpapers
D) Draft audit report
Diff: 1
Learning Objective: 19.4 Summarize the outcome of control testing.
Section Reference: Wrap-up
AACSB: None
Bloom's: Knowledge
AICPA: AC: Risk Assessment, Analysis, and Management
76) What are the results of an audit, such as written explanations of errors, improper activities, control weaknesses or deficiencies, and discovered fraud?
A) Document request
B) Wrap-up
C) Audit workpapers
D) Audit findings
Diff: 1
Learning Objective: 19.4 Summarize the outcome of control testing.
Section Reference: Wrap-up
AACSB: None
Bloom's: Knowledge
AICPA: AC: Risk Assessment, Analysis, and Management
77) Once the first draft of the audit report is complete, the audit team meets with the auditee in a(n) ________ to discuss the findings.
A) exit meeting
B) management's response
C) audit recommendations
D) audit findings
Diff: 1
Learning Objective: 19.4 Summarize the outcome of control testing.
Section Reference: Wrap-up
AACSB: None
Bloom's: Knowledge
AICPA: AC: Risk Assessment, Analysis, and Management
78) Management of the business area provides the audit team with ________, in the form of a plan for remediation.
A) exit meeting
B) management's response
C) audit recommendations
D) audit findings
Diff: 1
Learning Objective: 19.4 Summarize the outcome of control testing.
Section Reference: Wrap-up
AACSB: None
Bloom's: Knowledge
AICPA: AC: Risk Assessment, Analysis, and Management
79) Once the first draft of the audit report is complete, the audit team meets with the auditee in an exit meeting to discuss the findings. Management of the business area provides the audit team with management's response, in the form of a plan for remediation. But auditors don't come to these meetings empty handed. Instead, they provide ________ that include the cause of the issue, details about the root cause(s), and suggested actions management can take to address the findings.
A) exit meeting
B) management's response
C) audit recommendations
D) audit findings
Diff: 1
Learning Objective: 19.4 Summarize the outcome of control testing.
Section Reference: Wrap-up
AACSB: None
Bloom's: Knowledge
AICPA: AC: Risk Assessment, Analysis, and Management
80) Once feedback is gathered from essential stakeholders and updates are made based on those review comments, the ________ is created.
A) exit meeting
B) management's response
C) audit recommendations
D) final audit report
Diff: 1
Learning Objective: 19.4 Summarize the outcome of control testing.
Section Reference: Reporting
AACSB: None
Bloom's: Knowledge
AICPA: AC: Risk Assessment, Analysis, and Management
81) The final audit report is distributed to the auditees and their leadership. Which of the following is the most likely leader to whom the audit report is distributed?
A) Chief executive officer
B) Analyst
C) Intern
D) Supervisor
Diff: 2
Learning Objective: 19.4 Summarize the outcome of control testing.
Section Reference: Reporting
AACSB: None
Bloom's: Application
AICPA: AC: Risk Assessment, Analysis, and Management
82) If an audit has no findings, the engagement ends at what stage?
A) Field work
B) Reporting
C) Wrap-up
D) Follow-up
Diff: 1
Learning Objective: 19.4 Summarize the outcome of control testing.
Section Reference: Follow-up
AACSB: None
Bloom's: Comprehension
AICPA: AC: Risk Assessment, Analysis, and Management
83) Maeve is a Junior accounting student, interning with RAM Manufacturing LLC, a rapidly growing manufacturer of parts for the automotive industry. Maeve has been asked to prepare a chart that illustrates the three lines of defense. Maeve has a spreadsheet listing the names and job descriptions of five key employees. Using the chart below, help Maeve place each employee in the appropriate part of the IIA's three lines of defense model.
Name | Responsibility | Line of Defense |
Justin Wright | Provides assurance of the effectiveness of internal controls | |
Cameron Yoder | Performs annual reviews and writes opinions regarding the financial statements of the company | |
Ryan McDermott | Tests the effectiveness and efficiency of operations and the reliability and integrity of data | |
Lucy Volna | Guides those responsible for developing and implementing policies and procedures | |
Derrick Hile | Assists risk owners in defining the target risk exposure |
Name | Responsibility | Line of Defense |
Justin Wright | Provides assurance of the effectiveness of internal controls | Third |
Cameron Yoder | Performs annual reviews and writes opinions regarding the financial statements of the company | External Assurance |
Ryan McDermott | Tests the effectiveness and efficiency of operations and the reliability and integrity of data | Third |
Lucy Volna | Guides those responsible for developing and implementing policies and procedures | First |
Derrick Hile | Assists risk owners in defining the target risk exposure | Second |
Diff: 2
Learning Objective: 19.1 Compare and contrast internal and external audit functions.
Section Reference: External Auditors
AACSB: Analytic
Bloom's: Application
AICPA: AC: Risk Assessment, Analysis, and Management
84) Maeve is a recently hired internal auditor with RAM Manufacturing LLC, a rapidly growing manufacturer of parts for the automotive industry. After the audit kickoff meeting, Maeve is given a list of tasks, but the list is not in order. In the following chart, indicate which audit stage each task belongs in planning, fieldwork, wrap-up, reporting, or follow-up.
Number | Task | Audit Stage |
1. | Send a final copy of the audit report to the audit manager. | |
2. | Add your testing observations to the draft report. | |
3. | Schedule interviews and walkthrough meetings with the audit team and auditees. | |
4. | Update the audit canvas and scoping document to incorporate feedback for the business during the kickoff meeting. | |
5. | Finish drafting your workpapers and have them reviewed and approved by the senior auditor on the audit. |
Number | Task | Audit Stage |
1. | Send a final copy of the audit report to the audit manager. | Reporting |
2. | Add your testing observations to the draft report. | Wrap-up |
3. | Schedule interviews and walkthrough meetings with the audit team and auditees. | Fieldwork |
4. | Update the audit canvas and scoping document to incorporate feedback for the business during the kickoff meeting. | Planning |
5. | Finish drafting your workpapers and have them reviewed and approved by the senior auditor on the audit. | Wrap-up |
Diff: 2
Learning Objective: 19.2 Describe the stages of an internal audit.
Section Reference: Planning an Audit
AACSB: Analytic
Bloom's: Application
AICPA: AC: Risk Assessment, Analysis, and Management
85) Using the data provided in the table below, identify monthly payments that vary from payment trends.
One approach is to calculate an average ($25,211) and subtract each month's figure from the average. This allows you to identify the variance between the amount paid in each month from the average.
After making these calculations, we can see that May-22 and Nov-22 have large variances in relation to the other month's variances.
Diff: 3
Learning Objective: 19.3 Summarize the internal audit testing process.
Section Reference: Substantive Procedures
AACSB: None
Bloom's: Synthesis
AICPA: AC: Risk Assessment, Analysis, and Management
86) Maeve is a recently hired internal auditor with RAM Manufacturing LLC, a rapidly growing manufacturer of parts for the automotive industry. Maeve conducts an interview with Justin who works in customer management. Justin explains his process for adding new customers to the system.
• The process starts when Justin receives requests from the sales department to add a new customer.
• He reviews the request to determine if the new customer has been approved.
• If the request has been approved, Justin inputs the customer information into the customer management system. However, if it is not approved, he returns it to the source.
• If the customer name already exists in the system, Justin will get an error message and he will notify the requester that the customer name already exists.
• If the customer name does not exist, Justin will finish entering the customer information, including address, contact information and payment terms.
Create a process flowchart for the described customer management process.
Diff: 3
Learning Objective: 19.3 Summarize the internal audit testing process.
Section Reference: Information Gathering
AACSB: None
Bloom's: Synthesis
AICPA: AC: Risk Assessment, Analysis, and Management
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