What is Internal Audit?Internal auditing is an independent, objective assurance and consulting activity designed to add value and improve an organization’s operations. It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes. Show
Performed by professionals with an in-depth understanding of the business culture, systems, and processes, the internal audit activity provides assurance that internal controls in place are adequate to mitigate the risks, governance processes are effective and efficient, and organizational goals and objectives are met. Evaluating emerging technologies. Analyzing opportunities. Examining global issues. Assessing risks, controls, ethics, quality, economy, and efficiency. Assuring that controls in place are adequate to mitigate the risks. Communicating information and opinions with clarity and accuracy. Such diversity gives internal auditors a broad perspective on the organization. And that, in turn, makes internal auditors a valuable resource to executive management and boards of directors in accomplishing overall goals and objectives, as well as in strengthening internal controls and organizational governance. Seems like a lot to ask from one resource? Maybe for some, but for internal auditors — it’s all in a day’s work. Definition of Internal AuditingAccording to the Definition of Internal Auditing in The IIA's International Professional Practices Framework (IPPF), internal auditing is an independent, objective assurance and consulting activity designed to add value and improve an organization's operations. It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes. Internal Audit Profession ResourcesFor newcomers to the profession of internal auditing as well as experienced practitioners who want to promote the profession and its role in the success of an organization, the following resources are ideal for elevating the profession, enhancing professionalism, and building awareness. For more information, contact . Downloads and LinksThe BasicsAll in a
Day's Work Adding Value Across the Board Frequently Asked Questions About the Internal Audit Profession For Governing BodiesValue Proposition: Internal Auditing's Value to Stakeholders The Value of Internal Auditing for Stakeholders The Audit Committee: Internal Audit Oversight Standards and ProfessionalismAuthoritative Guidance What Does it Take to Be a
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An operational engagement relating to the purchasing function.The primary difference between operational engagements and financial engagements is that, in the former, the internal auditorsAre not concerned with whether the client entity is generating information in compliance with financial accounting standards.Are seeking to help management use resources in the most effective manner possible. Start with the financial statements of the client entity and work backward to the basic processes involved in producing them.Can use analytical skills and tools that are not necessary in financial engagements.Are seeking to help management use resources in the most effective manner possible.During an operational engagement, the internal auditors compare the current staffing of a department with established industry standards to Identify bogus employees on the department's payroll.Assess the current performance of the department and make appropriate recommendations for improvement.Evaluate the adequacy of the established internal controls for the department.Determine whether the department has complied with all lass and regulations governing its personnel.Assess the current performance of the department and make appropriate recommendations for improvement.Which group is charged with overseeing the establishment, administration, and evaluation of the processes of risk management and control?Operating managers.Internal auditors.External auditors.Senior management.Senior management.Which of the following statements about control self-assessment (CSA) is false?CSA is usually an informal and undocumented process.In its purest form, CSA integrates business objectives and risks with control processes.CSA is also known as control/risk self-assessment.Most implemented CSA programs share some key features and goals.CSA is usually an informal and undocumented process.In reviewing a cost-plus construction contract for a new catalog showroom, the internal auditor should be cognizant of the risk that The contractor could be charging for the use of equipment not used in the construction.Income taxes related to construction equipment depreciation may have been calculated erroneously.Contractor cash budgets could have been inappropriately complied.Payroll taxes may have been inappropriately omitted from billings.The contractor could be charging for the use of equipment not used in the construction.A company would like to contract for janitorial services for 1 year with 4 option years. The specifications require the potential contractor to perform certain cleaning services at specified intervals. Which of the following is the best contract type for this requirement?Cost-reimbursable.Indefinite delivery.Fixed-price.Time-and-materials.Fixed-price.An internal auditor is conducting an audit of environmental protection and alarm devices. Which is the most significant objective of such an assignment? To determine whetherThe devices are installed and operating properly. The costs of the devices were properly recorded.The device specification documents ate complete.Acquisitions and disposals are properly authorized.The devices are installed and operating properly.Which of the following does the internal auditor not have to review as thoroughly in a lump-sum contract?Progressive payments.Adjustments to labor costs.Work completed in accordance with the contract.Incentives associated with the contract.Work completed in accordance with the contract.Total quality management in a manufacturing environment is best exemplified by Identifying and reworking production defects before sale.Designing the product to minimize defects.Performing inspections to isolate defects as early as possible.Making machine adjustments periodically to reduce defects.Designing the product to minimize defects.Which forms of control self-assessment assume that managers and members of work teams possess an understanding of risk and control concepts and use those concepts in communications?The self-certification approach.The self-certification approach and facilitated approach.The self-certification approach and questionnaire approach.All self-assessment programs.All self-assessment programs.Which of the following statements about TQM is false?This approach can increase revenues and decrease costs significantly.TQM is a comprehensive approach to quality.TQM begins with internal suppliers' requirements.TQM concepts are applicable to the operations of the internal audit activity itself.TQM begins with internal suppliers' requirements.TQM is the continuous pursuit of quality in every aspect of organizational activities through a number of goals. Which of the following is not one of those goals?A philosophy of doing it right the first time.Promotion of individual work.Employee training and empowerment.Improvement of processes.Promotion of individual work.An internal audit team is performing a due diligence audit to assess plans for a potential merger/acquisition. Which of the following would be the least valid reason for a company to merge with or acquire another company?To diversify risk.To respond to government policy.To reduce labor costs. To increase stock prices.To increase stock prices.An organization is considering purchasing a small toxic waste disposal business. The internal auditors are part of the team doing a due diligence review for the acquisition. The scope of the internal auditors' work will most likely not includeAn evaluation of the merit of lawsuits currently filed against the acquiree. A review of the acquirree's procedures for acceptance of waste material and comparison with legal requirements.Analysis of the acquiree's compliance with, and disclosure of, loan covenants.Assessment of the efficiency of the operations of the acquiree.An evaluation of the merit of lawsuits currently filed against the acquiree.The reliability and integrity of all critical information of an organization, regardless of the media in which the information is stored, is the responsibility of Shareholders.IT department.Management.All employees.Management.Freedom from monitoring best definesPersonal privacy.Privacy of space. Privacy of communication.Privacy of information.Privacy of communication.When evaluating management of the organization's privacy framework, the internal auditor considersThe applicable laws relating to privacy.Conferring with in-house legal counsel.Conferring with information technology specialists.All of the answers are correct.All of the answers are correct.Using the balanced scorecard approach, an organization evaluates managerial performance based onA single ultimate measure of operating results, such as residual income.Multiple financial and nonfinancial measures.Multiple nonfinancial measures only.Multiple financial measures only.Multiple financial and nonfinancial measures.Which type of engagement focuses on operations and how effectively and efficiently the organizational units affected will cooperate?Program-related engagement.Process engagement.Privacy engagement. Compliance engagement. (adsbygoogle = window.adsbygoogle || []).push({});Process engagement.
Which type of engagement attempts to measure the accomplishment and relative success of undertaking?Program-results engagement.Privacy engagement.Process engagement.Compliance engagement.Program-results engagement.Discipline of employee may be limited by all of the following exceptWhistleblower laws.A requirement to report certain employee violations to a governmental entity.Union contracts.Exceptions to the employee-at-will doctrine.A requirement to report certain employee violations to a governmental entity.Compliance programs most directly assist organizations by doing which of the following?1. Developing a plan for business continuity management.2. Determining director and officer liability.3. Planning for disaster recovery.1 only2 only1 and 2 only.1, 2, and 3.2 onlyAn organization establishes compliance standards and procedures and develops a written business code of conduct to be followed by its employees. Which of the following is true concerning business codes of conduct and the compliance standards?Compliance standards should be straightforward and reasonably capable of reducing the prospect of criminal conduct.The compliance standards should be codified in the charter of the audit committee.Companies with international operations should institute various compliance programs, based on selective geographic locations, that reflect appropriate local regulations.In order to prevent future legal liability, the code should consist of legal terms and definitions.Compliance standards should be straightforward and reasonably capable of reducing the prospect of criminal conduct.Employees have the most confidence in a hotline monitored by which of the following?An expert from the legal department, backed by a nonretaliation policy.An in-house representative, backed by a retaliation policy.An on-site ombudsperson, backed by a nonretaliation policy.An off-site attorney who can better protect attorney-client privilege.An on-site ombudsperson, backed by a nonretaliation policy.What is the role of a chief audit executive CAE with regard to an inspection by a regulator?The internal audit activity is led by the chief audit executive (CAE). The CAE delineates the scope of activities, authority, and independence for internal auditing in a written charter that is approved by the audit committee.
Which of the following is normally a responsibility of the audit committee with regard to the internal?Which of the following is normally a responsibility of the committee with regard to the internal audit activity? Approval of the selection and dismissal of the chief audit executive.
What is the role of audit committee?The primary purpose of a company's audit committee is to provide oversight of the financial reporting process, the audit process, the company's system of internal controls and compliance with laws and regulations.
Which of the following is the most important benefit to management of the establishment of an internal auditing department?The most important benefit of an internal auditing activity to management is assurance that the organization is complying with legal requirements.
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Which group is charged with overseeing the establishment administration and evaluation of the processes of risk management and control?
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