Question 1

Which of the following would be considered the most significant problem for internal audit if the chief audit executive reported to the controller?

Accepted Answer

If the chief audit executive reports to the controller, there is a risk that the controller may control the scope of audits and censor audit reports before they are sent to management and the audit committee. This poses a significant problem for internal audit as it undermines their independence and objectivity. The other options may also pose challenges for internal audit, but they are not as significant as the risk of compromised independence and objectivity.

Question 2

Which of the following is not required to become a certified internal auditor (CIA)?

Accepted Answer

While a full-time position as an internal auditor may be helpful in gaining the necessary experience, it is not a requirement to become a CIA. Holding a college degree, passing a two-day examination, and meeting an experience requirement are all necessary to become a certified internal auditor.

Question 3

The U.S.Government Accountability Office is an agency of

Accepted Answer

The U.S. Government Accountability Office (GAO) is an agency of the U.S. Congress. Its mission is to provide auditing, evaluation, and investigative services for Congress to ensure that the federal government is accountable to the American people.

Question 4

Which of the following would be considered in determining whether an internal audit department is independent?

Accepted Answer

The independence of an internal audit department is determined by the organizational level of the chief audit officer, which ensures they have sufficient authority, and the objectivity of the audit staff, which ensures unbiased auditing.

Question 5

In performing a financial statement audit in accordance with government auditing standards,an auditor is required to report on the entity's compliance with laws and regulations.This report should

Accepted Answer

Government auditing standards require auditors to state that compliance with laws and regulations is the responsibility of the entity's management.

Question 6

Which of the following is a difference between performing an audit and performing a fraud examination?

Accepted Answer

The answer of Which of the following is a difference...

Question 7

In assessing the objectivity of internal auditors,an independent auditor should

Accepted Answer

The organizational level to which internal auditors report can indicate their objectivity. If they report to a high level, such as the audit committee, it suggests greater independence from management influence.

Question 8

The demand for compliance auditing in generally accepted government auditing standards (GAGAS)terms is generated by

Accepted Answer

Governmental managers have obligations to follow laws and regulations, which generates the demand for compliance auditing under GAGAS to ensure adherence to these requirements.

Question 9

Generally accepted government auditing standards (GAGAS)regarding performance reporting standards requires the reports to tell about which of the following

Accepted Answer

The answer of Generally accepted government auditing standards (GAGAS)regarding performance...

Question 10

After performing work in a compliance attestation engagement and finding that a governmental agency's managers failed to install and perform even the most elementary controls to ensure compliance with laws and regulations and,in fact,committed numerous violations,an auditor most likely would

Accepted Answer

The auditor would write an adverse report on actual compliance because the findings indicate significant noncompliance with laws and regulations.

Question 11

Fraud examiners have four main objectives in performing an investigation.Which of the following is not one of those objectives?

Accepted Answer

The answer of Fraud examiners have four main objectives in...

Question 12

The Single Audit Act of 1984 requires an annual audit of all governments,agencies,and nonprofit organizations that

Accepted Answer

The Single Audit Act of 1984 requires an annual audit for entities that spend $500,000 or more in federal funds.

Question 13

When auditors report on a financial audit engagement in accordance with generally accepted government auditing standards (GAGAS),the basic report(s)include a

Accepted Answer

When auditors report on a financial audit engagement in accordance with generally accepted government auditing standards (GAGAS), the basic report(s) include a Report (opinion) on financial statements, report on internal control, and report on compliance audit regarding laws and regulations. Therefore, option B is the best choice.

Question 14

When performing a fraud examination,the fraud examiner takes great care to preserve and identify any documents that may indicate fraud,which is called

Accepted Answer

Preserving the chain of custody of the evidence is the process of ensuring the document trail of evidence is securely maintained, properly documented, and indisputably tied to the identity of the evidence. This is a crucial step to avoid tampering or contamination of the evidence, and to ensure its admissibility in legal proceedings.

Question 15

Which of the following statements is true?

Accepted Answer

External auditors are required to consider the work of the internal audit function as part of obtaining an understanding of a company's internal control structure. However, they are not required to review all work performed by internal auditors or investigate the competence and objectivity of internal auditors. Additionally, external auditors do not share responsibility for the work of internal auditors if it is used for evidence for the financial statement audit.

Question 16

Which of the following statements is a standard applicable to financial statement audits in accordance with government auditing standards?

Accepted Answer

Option A pertains to Performance audits, Option C pertains to Sampling in Auditing-General standards, and Option D pertains to Program audits. However, reporting on the scope of testing internal controls is a standard applicable to financial statement audits in accordance with government auditing standards.

Question 17

When independent CPAs in public practice take engagements to audit government units or financial assistance recipients,they must follow

Accepted Answer

Independent CPAs in public practice must follow both Generally Accepted Auditing Standards (GAAS) and Generally Accepted Government Auditing Standards (GAGAS) when auditing government units or financial assistance recipients. GAGAS provides additional guidance and requirements specific to auditing in the government environment.

Question 18

A GAO audit report entitled Aviation Safety: Safer Skies Initiative Has Taken Initial Steps to Reduce Accident Rates by 2007 is most likely a report based on work the auditors performed during a

Accepted Answer

The title of the report clearly indicates that the auditors were evaluating the effectiveness and progress of the Safer Skies Initiative in achieving its program goal of reducing accident rates by 2007, which aligns with the definition of a performance audit.

Question 19

When considering the competence of internal auditors,external auditors should obtain evidence about the

Accepted Answer

Obtaining evidence about the educational and experience qualifications of the internal auditors is the best choice when considering the competence of internal auditors. This evidence helps external auditors assess the skills and knowledge of the internal auditor team and allows them to evaluate whether the team has the necessary competence to perform their job effectively. The other choices (B, C, and D) may be relevant but are not as directly related to assessing the competence of the internal auditors.

Question 20

The work of internal auditors may affect the independent auditor's

Accepted Answer

The work of internal auditors may affect the independent auditor's procedures performed in obtaining an understanding of the internal control structure, in assessing the risk of material misstatement, and in performing substantive tests to obtain direct evidence. As such, it is recommended that the independent auditor coordinate and communicate with the internal audit department to avoid duplication of efforts and ensure that the work performed by the internal auditors is reliable and relevant to the audit objectives.

Quiz 16: Internal Governmental and Fraud Audits