INTERNAL AUDITING & CONTROLS REVIEW QUESTIONS MODULE 1 MULTIPLE CHOICE Select the best answer for each

of the following unrelated items. Answer each of these items in your examination booklet by giving the number of your choice. For example, if the best answer for item (a) is (1), write (a)(1) in your examination booklet. If more than one answer is given for an item, that item will not be marked. Incorrect answers will be marked as zero. Marks will not be awarded for explanations. a) Following the adoption of the current definition of internal auditing in 1999, the IIA significantly revised its Standards for the Professional Practice of Internal Auditing (now called International Standards for the Professional Practice of Internal Auditing). According to the definition and Performance Standards, what are the three areas of work for internal auditors? 1) Risk management, control and governance 2) Financial reporting, control and governance 3) Financial reporting, risk management, and control 4) Risk management, safeguarding of assets, and governance b) Planning is one of the four main functions of management. Which of the following management activities are part of effective planning? 1) Setting objectives and goals and verifying compliance with policies and procedures 2) Formulating programs and premises and indentifying budget variances for analysis 3) Preparing budgets and identifying budget variances for analysis 4) Setting objectives and goals and preparing budgets c) In addition to helping an organization evaluate and improve its risk management process, which of the following best describes how internal auditing helps an organization accomplish its goals? 1) It helps an organization evaluate and improve its control and governance processes. 2) It helps an organization evaluate and improve its strategic management and governance processes. 3) It helps an organization evaluate and improve its human resources management and governance processes. 4) It helps an organization evaluate and improve its financial management and governance processes. d) Which of the following best describes the responsibilities of the internal auditor? 1) Internal auditors are responsible for ensuring compliance and enforcement of all an organizations policies, especially ethical policies relating to a corporate conflict of interest policy. 2) Internal auditors are expected to carry out fraud investigation assignments as long as management is willing to support the internal audit function.

3) As with any other employee, internal auditors access to information in the organization is restricted to their specific area of responsibility; accordingly, internal auditors must follow the ethical principle of respecting the confidentiality of financial, operational, and personal information when they seek information from other employees. 4) Internal auditors may be asked by management for an interpretation of relevant ethical standards, such as conflict of interest rules or corporate and professional codes of ethics. e) Management auditors contribution to the business is mainly measured by which of the following? 1) The auditors ability to assist in the performance of operational managers responsibilities 2) The effectiveness of the control systems they have set up 3) Their ability to monitor activities 4) The extent to which they increase public confidence in the company f) According to the definition and performance standards adopted by the Institute of Internal Auditors (IIA), controls should address which of the following? 1) The reliability and integrity of financial information, the reliability of services provided by the organization, the safeguarding of assets, and compliance with laws 2) The image projected by the company, the effectiveness and efficiency of the organizations operations, the safeguarding of assets, and compliance with laws 3) The reliability and integrity of financial information, the effectiveness and efficiency of the organizations operations, the safeguarding of assets, and compliance of activities with policies of the board of directors 4) The reliability and integrity of financial information, the effectiveness and efficiency of the organizations operations, the safeguarding of assets, and compliance with laws Solutions to multiple choice questions: a) b) c) d) e) f) 1 4 1 4 1 4