Choose the letter of the correct answer:

1. Which of the following best describes the objective of internal auditing?

a. To assist members of the organization in the effective discharge of their responsibilities
b. To assist management with the design and implementation of accounting and control systems
c. To examine and evaluate an organization's accounting system as a service to management
d. To monitor the organization's internal control system for the external auditors

2 Internal Auditing is an assurance and consulting activity. An example of an assurance service is a(n)
a. advisory engagement

b. facilitation engagement

c. training engagement

d. compliance engagement

3. Which of the following statements are NOT true regarding assurance and consulting services?
a, Both services include a three-way relationship between users, IAS, and auditees or customers.
b. In •assurance engagements, IAS take responsibility for ensuring that the nature and scope of the
engagement are aligned with user interests
c. Both services work toward improving the organization's governance, risk management, and control
processes
d. In consulting services, the customer is involved in determining the nature and scope of the
engagement.

4 The primary objective of internal auditing is to:

a. Find errors and fraud within the company.

b. Perform the preliminary work of external financial

statement audit.
c. Provide an opinion about the accuracy and completeness of the quarterly financial statements.

d. Help the employees of the company to effectively perform their jobs.

5. Support from which persons or combination of persons listed below is most important to the success of the
internal audit activity?

a. The chief executive officer and chief financial officer.

b. The chief executive officer.

c. Management and the board

 d. The audit committee

6. Who is ultimately responsible for determining that the objectives for an internal audit engagement have been
met?

a. The individual internal audit member

b. The chief audit executive

c. The audit committee

d. The internal audit engagement supervisor for the engagement

7. Which of the following is not a key components of the definition of internal auditing

a. Helping the organization accomplish its objectives.

b. Installing and managing effective accounting internal controls.

c. Evaluating and improving the effectiveness of risk management, control, and governance processes.

d. Assurance and consulting activity designed to add value and improve operations.

8. Which of the following activities is outside the scope of internal auditing?

a. Evaluating risk exposure regarding compliance with policies, procedures, and contracts.

b. Safeguarding of assets.

c. Evaluating risk exposures regarding compliance with laws and regulations

d. Ascertaining the extent which management has established criteria to determine whether objectives
have been accomplished.
9. Which one is not the internat auditor's assurance responsibility to achieve organizations strategy,
operational, financial and compliance objectives
a. Assurance on Governance

b. Assurance on Risk

c. Assurance on Financial Statements

d. Assurance on Controls

10. The following statements relate to the rotes of internal aucfitors, Which of the following is incorrect?
 a. Based on the results of the rtsk assessment, the internal auditors evaluate the adequacy and
effectiveness of how risks are identified and managed.

b. Internal auditors also assess other aspects such as ethics and values within the organ(zation,
performance management, communication of risk and control information within the organization
in order to facilitate a good governance process.
c. Internal auditors are expected to provide recommendations for improvement in those areas where
opportunities or deficiencies are identified.
d. While Internal auditors are responsible for Internal controls, the management provides assurance
to the board and the audit committee that internal controls are effective and working as intended.

11. One of the objectives of internal audit activity to add value to the organization. Which of the following
statements appropriately describe the role of internal audit activity in adding value to the organization?
a. An effective internal audit activity (s a valuable resource for management and the board or its
equivalent, and the audit committee due to its understanding of the organization and its culture,
operations, and risk profile.
b. The objectivity, skills, and knowledge of competent internal auditors can significantly add value to
an organization's internal control, risk management, and governance processes.
c. An effective internal audit activity can provide assurance to other stakeholders such as regulators,
employees, providers of finance, and shareholders.
d. All of the statements are correct

12.Independence permits internal auditors to render impartial and unbiased judgments. The best way to achieve
independence is through
a. Individual knowledge and skills

b. Organizational status and objectivity

c. Supervision within the organization

d. Organizational knowledge and skills

13.Which of the following is a false statement?

a. Conflict of interests have been a subject of extreme importance in recent scandals in which
employees, agents and professionals failed to exercise proper judgment on behalf of their principals.
b. A conflict of interest occurs when the independent judgment of a person is swayed, or might be
swayed, from making decisions in the best interest of others who are retying on that judgment.
c. A professional accountant is expected to make judgments that are in the public interest.

d. An executive is not expected to make judgments in the best interest of the company.
 14.A conflict of interest exists when a given decision maker (i.e.; Juan) and another person (i.e., Pedro) are in
the following situation:
a. Juan has to exercise judgement in Pedro's behalf

b. Pedro has to exercise judgement in Juan's behalf

c. Juan has a special interest that interferes with proper judgement

d. (a) and (b)

e. (a) and (c)

15. An audit committee should be designed to enhance the independence of both the internal and external auditing
functions and to insulate them from undue management pressures. Using this criteria, audit 'committees
should be composed of:

a. A rotating subcommittee of the board of directors or its equivalent.

b. Only members from the relevant outside regulatory agencies.

c. Members from all important constituencies, specifically including representatives from

banking, labor, regulatory agencies, shareholders, and officers.

d. Only external members of the board of directors or its equivalent.