BALIUAG UNIVERSITY

APC 18 – Operations Auditing

Quiz 2 – SET A

NAME: _____________________________________________
SCORE: _____________
Last name First name M.I.
YR/SECTION: ______________
RATING: ____________
I. True or False. Write TRUE if the statement is correct Otherwise, write FALSE. No erasures.
_______1. The International Standards for the Professional Practice of Internal Auditing used the word
“should” to specify an unconditional requirement. (False)
_______2. If internal auditors or the internal audit activity is prohibited by law or regulation from
conformance with certain parts of the Standards, conformance with all other parts of the
Standards and appropriate disclosures are needed.
_______3. When inconsistencies exist between the Standards (ISPPIA) and other requirements,
internal auditors and the internal audit activity must conform with the Standards and may
conform with the other requirements if such requirements are less restrictive.
_______4. Final approval of the internal audit charter resides with the Chief Audit Executive.
_______5. Organizational independence is effectively achieved when the chief audit executive reports
functionally to the board and not to the company president.
_______6. Conflict of interest is a situation in which an internal auditor, who is in a position of trust,
has a competing professional or personal interest.
_______7. Objectivity is presumed to be impaired if an internal auditor provides assurance services for
an activity for which the internal auditor had responsibility within the current year.
_______8. Internal auditors are required to demonstrate their proficiency by obtaining appropriate
professional certifications and qualifications, such as the Certified Internal Auditor
designation and other designations offered by The Institute of Internal Auditors and other
appropriate professional organizations.
_______9. The audit committee of the board is responsible for communicating the final results of the
internal audit engagement to parties who can ensure that the results are given due
consideration.
_______10.Internal auditors are encouraged to acknowledge satisfactory performance in engagement
communications.
_______11.Assurance procedures alone, even when performed with due professional care, do not
guarantee that all significant risks will be identified.
_______12.Internal auditors may provide consulting services relating to operations for which they had
previous responsibilities.
_______13.External assessments must be conducted at least once every five years by a qualified,
independent assessor or assessment team from within the organization.
_______14.In exercising due professional care internal auditors must consider the use of technology-
based audit and other data analysis techniques.
_______15.The evaluation of the reliability and integrity of financial and operational information as
well as the effectiveness and efficiency of operations and programs is considered as an
evaluation of the adequacy and effectiveness of controls

II. Multiple choice. Choose the best answer from the given choices. ENCIRCLE the letter of your
choice. No erasures.
1. While reviewing the workpapers of a new auditor, the auditor in charge discovered that additional
audit procedures might be necessary. According to IIA guidance, which of the following would be
most relevant for the auditor in charge to consider when making this decision?
A. Due professional care B. Coordination C. Resource management D.
Engagement supervision
2. Which of the following is not true with regard to the internal audit charter?
A. It defines the authorities and responsibilities of the internal audit activity.
B. It provides a basis for evaluating the internal audit activity.
C. It should be approved by senior management and the board.
D. It specifies the minimum resources needed for the internal audit activity.
3. An employee who recently transferred into the internal audit activity has been assigned to audit
the accounts payable system. Which function, if previously performed by the auditor, would
represent a conflict of interest?
A. Monitoring the allowance for doubtful accounts.
B. Signing timekeeping cards for subordinates.
C. Reviewing shipping documents for accuracy.
D. Writing procedures for the handling of duplicate vendor payments.
4. Which of the following would be the least desirable criteria against which to judge current
operations of a company's treasury function?
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 A. Company policies and procedures delegating authority and assigning responsibilities.
B. Finance textbook illustrations of generally accepted good treasury function practices.
C. The operations of the treasury function as documented during the last audit engagement.
D. Codification of best practices of the treasury function in relevant industries.
5. According to the International Professional Practices Framework, a primary purpose of evaluating
the adequacy of an organization's risk management, control, and governance processes is to
determine if it:
A. Was designed to ensure compliance with policies, plans, procedures, laws, and regulations
B. Mitigates inherent risk
C. Assures the reliability and integrity of information used by management
D. Provides reasonable assurance that the organization's objectives will be met
6. If an internal auditor discloses confidential information in response to a lawsuit, the internal
auditor has violated.
A. Both the IIA Code of Ethics and the Standards C. The IIA Code of Ethics
B. Neither the IIA Code of Ethics nor the Standards D. The Standards
7. When planning the work program for an assurance engagement, an internal auditor should first
review the department's business objectives and then:
A. Determine scope B. Review controls C. Identify risks D. Evaluate
vulnerabilities
8. Which of the following is a performance standard?
A. Quality of Communications
B. External Assessments
C. Requirements of the Quality Assurance and Improvement Program
D. Chief Audit Executive Roles Beyond Internal Auditing
9. In order to ensure that the internal auditors have the objectivity required by the Standards, the
chief audit executive should:
A. Carefully assign personnel to individual audit engagements and require auditors to disclose all
conflicts of interest.
B. Demonstrate willingness to include in engagement final communications all matters believed
to be important.
C. Require all auditors to sign statements attesting to their independent mental attitudes and
honest belief in their work product.
D. Appraise each auditor's performance on each audit assignment.
10. Management has requested that an internal auditor serve as member of a task force that will
review current receivables practices and make recommendations to improve processes. Which of
the following is the most appropriate response by the internal auditor?
A. Decline the assignment because participation on task forces will impair the auditor's objectivity
in future audit engagements.
B. Accept the assignment if the auditor believes that it will not impair objectivity in future audit
engagements.
C. Accept the assignment provided that such consulting services are defined in the charter.
D. Do not accept the assignment because the assignment is not part of an approved audit plan.
11. Which of the following is an appropriate role for the board in governance?
A. Preparing written organizational policies that relate to compliance with laws, regulations,
ethics, and conflicts of interest.
B. Assisting the internal audit activity in performing annual reviews of governance.
C. Working with the organization's attorneys to develop a strategy regarding current litigation,
pending litigation, or regulatory proceedings governance.
D. Ensuring that financial statements are understandable, transparent, and reliable.
12. When internal auditors perform consulting services that add value and improve an organization's
operations, these services:
A. Should be consistent with the internal audit activity's empowerment reflected in the charter.
B. Impair the internal auditors' objectivity with respect to an assurance service involving the
same engagement client.
C. Would preclude the achievement of assurance from the consulting engagement.
D. Impose no responsibility to communicate information other than to the engagement client.
13. An organization that outsources much of its internal audit work to an external service provider is
planning for an external quality assessment. Which of the following options would accomplish this
task and be in conformance with the Standards?
A. A team from an independent entity that previously employed the chief audit executive of the
organization.
B. A team under the direction of the organization's chief audit executive with validation by a
former manager of the internal audit activity.
C. The same external service provider because of its competency and experience with the
organization.
D. External industry associate that performed a similar review for a supplier of the organization.
14. To assure that the technical proficiency of internal auditors is appropriate for the audit
engagements to be performed, a chief audit executive should:

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 A. Ensure that each newly hired auditor is qualified in all of the disciplines needed to accomplish
the department's audit mission.
B. Oversee a training program that matches the actual training provided with the interests of
individual auditors.
C. Consider the scope of work and level of responsibility when establishing criteria for education
and experience in filling internal auditing positions.
D. Require all of the audit staff to pursue a minimum number of continuing professional education
hours each year.
15. Consider the following internal auditing standards:
1) Coordination and Reliance 5) Engagement Disclosure of Nonconformance
2) Internal Assessments 6) Quality Assurance and Improvement
Program
3) Continuing Professional Development 7) Organizational Independence
4) Communication and Approval
Which of the standards enumerated above are categorized as attribute standards?
A. 2, 3 and 7 B. 1, 3, 6 and 7 C. 2, 3, 6 and 7 D. 1, 3, 5 and 6
End of quiz. Good luck and God bless!

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