Statement 1.

Sufficiency is one of the attributes

b. When reporting on comparative financial
of good evidence. Statement 2: Gathering all
statements, the independent auditor may
the information is necessary to provide perfect
discard working papers after two years.
evidence.
c. Working papers may be regarded as a
Select one:
substitute for the client's accounting records.
a. False; False
d. The auditor should document the
b. True; True  understanding of the client's internal control
c. False; True obtained to plan the audit
Statement 1: Audit report assures the
d. True; False management that business risks are well
The following are the testing process, except controlled. Statement 2: Audit report does not
support action plans prepared by client
Select one: management.
a. Perform the test Select one:
b. Interpret the results a. True; True
c. Define the test objective b. True; False 
d. Give opinion c. False; True
All are fraud equation, which is not?
d. False; False
Select one: Which of the following is an objective of audit
a. Opportunity report?
b. Attraction  Select one:
c. Motive a. To bring problems to management’s
attention. 
d. Means
b. To alert them to areas where there are
An independent, objective assurance and defined risk exposures.
consulting activity designed to add value and
improvement an organization’s operations is c. To advise them on steps necessary to
called as improve risk management strategies.
Select one: d. To assure management that business risks
are well controlled.
a. Internal Audit 
Determines whether key controls are adhered
b. External Audit to.
c. Compliance Audit Select one:
d. None of the above a. Compliance 
Which of the following statements about b. Dual purpose
working papers is correct?
c. Substantive
Select one:
d. Walk-Through
a. Working papers are not permitted to be
used as a reference source by the client.  The end goal of internal auditing is to bring
continuous improvement to the organization
and offer alternative solutions to better the
conduct of business
Select one:
c. True; False 
a. Operational Effectiveness 
d. True; True
b. Quality control
Operational auditing is primarily oriented
c. Designed to add value toward:

d. Assurance and Consultancy Select one:

The ________should coordinate internal and
external audit efforts to minimize duplication of
audit work and to increase the effectiveness of
audit work.
Select one:
a. CEO
b. Management
c. CAE  management’s goals
d. Board
It is an audit planning approach which focuses
on the strategic, regulatory, financial, and
business risks to which an organization has
exposure.
Select one:
a. Traditional Audit Planning
b. Corporate Governance-Based Planning
c. Risk-Based Planning  support an audit.
a. The accuracy of data reflected in
management’s financial records
b. Past protection provided by existing internal
control 
c. Verifying that a company’s financial
statements are fairly presented
d. Future improvements to accomplish
Which of the following don’t belong to the
category of fraud?
Select one:
a. Undiscovered
b. Known and recorded publicly
c. Known and recorded internally
d. Conspiracy 
It is the act of securing suitable evidence to

d. Transaction-Based Planning Select one:

Which is not a type of test? a. Sampling
Select one: b. Planning
a. Compliance c. Testing 
b. Substantive d. Reporting
c. Dualcore  This refers to the way organization is directed
and controlled
d. Walkthrough
Select one:
Statement 1: The objective of audit report is to
provide assurance to management on their a. Corporate Strategy
activities. Statement 2: Audit report aims to
show managers how their problems may be b. Corporate Activities
solved. c. Corporate Governance 
Select one: d. Corporate Development
a. False; False They are responsible for plan setting on what
step to take if fraud is reported or detected.
b. False; True
Select one:
a. Internal Audit
b. Management 
c. Auditor
d. BOD
Who deal with the whistleblowers?
Select one:
a. Auditor
b. Management
c. Internal Audit 
d. BOD
Some of the sampling methods fall under
substantive testing. Which of the following
does not belong to the group?
Select one:
a. Difference Estimates
b. Discovery Sampling 
c. Monetary Unit Sampling
d. Variable Sampling
Corporate directors, management, external
auditors and internal auditors all play important
roles in creating a proper control environment.
Top management is primarily responsible for
Select one:
a. Establishing a proper environment and
specifying overall internal control 
b. Ensuring that external and internal auditors
adequately monitor the control environment
c. Reviewing the reliability and integrity of
financial information and the means used to
collect and report such information
d. Implementing and monitoring controls that
are designed by the board of directors
Which of the following is correct about internal
control?
Select one:
a. management does not consider costs of the
accounting and internal control systems
b. one of the inherent limitations of accounting
and internal control systems is the possibility
that the procedures may become inadequate
due to changes in conditions and compliance
with procedures may deteriorate. 
c. most internal controls tend to be directed at
non-routine transactions.
d. accounting and internal control systems
provide management with conclusive evidence
that objectives are reached
When should a risk be avoided?
Select one:
a. When the risk event is unacceptable–
generally one with a very high probability of
occurrence and high impact
b. When the risk event has a low probability of
occurrence and low impact 
c. A risk event can never be avoided
d. When it can be transferred by purchasing
insurance
Is titled to aid an organizational mission as well
as a guide to what the company stands for and
will uphold to its consumers.
Select one:
a. Whistleblowing
b. Corporate Social Responsibility 
c. Corporate Governance
d. Ethical Reporting
It is a type of tests that involves taking a small
sample of items that are traced through the
system to ensure that the auditor understands
the system.
Select one:
a. Dual Purpose
b. Compliance
c. Walk-through 
d. Substantive
Uncertainty is often used in conjunction with
the term risk, implying that uncertainty is risk.
Uncertainty is an unknown situation that may
result from a lack of information to sufficiently
quantify the probability of occurrence of an
event and to determine the most likely
outcome. Therefore, any uncertainty that has a
potential for a major impact in a project should
be
Select one:
a. Resolve before project implementation but
must be resolved before starting that area of
work  Select one:
b. Study to determine alternatives that may
have a high risk index but are fully understood
c. Ignored until additional information can be
obtained to resolve the actual risk exposure
d. Assigned a risk exposure index of greater
than or equal to eight pending further
resolution of the risk exposure
Effective internal control requires
organizational independence of departments.
Organizational independence would be
impaired in which of the following situations
Select one:
a. The cashier reports to the treasurer  Select one:
b. The payroll accounting department reports
to the chief accountant
c. The internal auditors report to the audit
committee of the board of directors
d. The controller reports to the vice-president
of production
The ____________should have periodic
quality assurance reviews.
Select one:
a. The Audit Committee  b. Ensure the accuracy, reliability and
b. Management
c. Internal Auditor
d. External Auditor
A tool used businesses to promote risk
management in teams, projects, through
processes and generally throughout the
organizational.
Select one:
a. Control Risk Self-Assessment 
b. Control Environment
c. Safeguard of Asset
d. Enterprises–Wide Risk Management
When reviewing audit working papers, the
primary responsibility of an audit supervisor is
to determine that:
a. Working papers adequately support the
audit findings, conclusions, and report. 
b. Each worksheet is properly identified with a
descriptive heading.
c. Working papers are properly referenced and
kept in logical groupings.
d. Standard departmental procedures are
adhered to with regard to work paper
preparation and technique.
The uncertainty of outcome within a range of
exposures arising from a combination of impact
and probability of potential events is
a. Occurrence
b. Contingency
c. Risk 
d. Probability
A reason to establish internal control is to
Select one:
a. Encourage compliance with organization
objectives
timeliness of information
c. Have a basis of planning the audit
d. Provide reasonable assurance that the
objectives of the organization are achieved 
Which of the following is/are the function of the
audit report? I. To assure management that
business risk are well controlled. II. To alert
them to areas where there are defined risk
exposures. III. To advise them on steps
necessary to improve risk management
strategy. IV. To support action plans prepared
c. Expenditures for fixed assets have been
by client management.
recorded in the proper period
Select one:
d. Non-capital repair expenditures have been
a. II and III recorded in the proper period
b. I and II Internal auditors are most likely to issue a
report on which of the following?
c. I, II, III, and IV 
Select one:
d. I, II and III
a. Annual financial statement reporting
Internal audit definition, audit objectives must
be carried out in unbiased manner and free b. Internal control 
from influence of management.
c. Tax compliance
Select one:
d. Quarterly financial statement reporting
a. Assurance and consulting activity
A test of 200 invoices randomly selected by the
b. Independence  internal auditor revealed that 40 had not been
approved for payment. At the 95% confidence
c. Designed to add value level and tolerable error rate of 20%, the
d. Systematic approach auditor may conclude that
Statement 1: Achieving good governance is a Select one:
major concern for companies as they have to
a. The internal controls employed are effective 
report on their activities to an often sympathetic
shareholder group whose only interest in the b. The internal controls employed are
business is whether it is making money or not. dependent upon the nature of transactions
Statement 2: Is a relationship among
c. The internal controls employed are
stakeholders that is used to determine and
overruled by the management
control the strategic direction and performance
of organizations. d. The internal controls employed are
Select one: ineffective
The auditor communicates the results of his
a. True; False
work through the medium of the
b. True; True
Select one:
c. False; True 
a. Audit Report 
d. False; False b. Engagement Letter
Identification of an appropriate population to
c. Financial Statements
sample is dependent upon audit objectives. A
population of entries in an asset repairs d. Management Letter
expense file would be an appropriate
It is perpetrated by parties and organizations to
population if the audit objective is to determine
obtain money, property or services.
whether
Select one:
Select one:
a. Attraction
a. Non-capital repair expenditures have been
properly charged to expense  b. Concealment
b. Expenditures for fixed assets have been c. Motive
improperly expensed.
d. Fraud 
Corporate governance codes and policies have
become to be relied on to re-establish the
performance/conformance balance to ensure
Select one:
a. Integrity, responsibility and accountability
b. Integrity, openness and accountability  frame can almost always be overcome by
c. Integrity, fair play and accountability
d. Integrity, honestly and accountability
Statement 1: During audit planning, the
management should review all relevant
information such as risk models/risk analysis,
audit plans, audit assignments, and activity
reports. Statement 2: The chief audit executive
should provide written policies and procedures
to guide the audit staff.
Select one:
a. True ; True
b. False ; True 
c. True ; False
d. False ; False
Statement 1: Agency Concept is the basis for
the main driver for Corporate Governance.
Statement 2: The desires or goals of the
principal and agent conflict and they are
difficult or expensive for the principal to verify
that the agent has behaved appropriately.
Select one:
a. False; True
b. False; False
c. True; True  as
d. True; False
Which one of the following statements about
sampling is true?
Select one:
a. For a given sample size, a simple random
sample always produces the most
representative sample 
b. A larger sample is always more
representative of the underlying population
than a smaller sample
c. For very large populations, the absolute size
of the sample has more impact on the
precision of its results than does its size
relative to its population
d. The limitations of an incomplete sample
careful sampling techniques
The main advantage of properly indexed
working papers is to
Select one:
a. Reduce the size of the file.
b. Facilitate the efficient use of audit staff. 
c. Better organize the working papers.
d. Allow division of labor within the audit team.
The audit plan should include the following,
except
Select one:
a. The approximate starting date for each
audit.
b. An estimate of the time required for each
audit, risk, exposure and potential loss to the
organization.
c. A detailed schedule of areas to be audited
during the coming year.
d. Major changes in operations in one of the
departments. 
Internal audit works and is guided by a set of
standards to ensure credibility, reliability and
quality of internal audit practitioners and their
audit work. This professional discipline called
Select one:
a. Code of Ethics
b. Audit Professionalism 
c. Code of Standards
d. Corporate Governance
It is the response to risk and decisions made in
respect of available choices and resources.
Select one:
a. Opportunities
b. Assessment
c. Corporate objectives

d. Risk Management 
All of the following are parameters of statistical
sampling. Which is not?
Select one:
a. Difference Estimates 
b. Confidence
c. Precision

d. Error rate
Statement 1: Engagement working papers
generally support the accuracy and
completeness of the work performed.
Statement 2: Working papers should be signed
by the management and the board.
Select one:
a. True; True
b. True; False 
c. False; True

d. False; False