Question 1

Name three expectations of today's internal auditors.

Accepted Answer

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Question 2

The role of internal auditors in an organization have not expanded significantly in the last two decades.

Accepted Answer

The role of internal auditors has expanded significantly in the last two decades due to changes in the business environment, increased regulatory requirements, and the need for risk management. Internal auditors now play a key role in providing assurance to stakeholders, advising management on strategic initiatives, and identifying opportunities for process improvements.

Question 3

The primary source of authoritative literature for doing government audits is the
A) Purple Book.
B) Yellow Book.
C) Green Book.
D) Red Book.

Accepted Answer

The Yellow Book, officially the Generally Accepted Government Auditing Standards (GAGAS), is the primary source of authoritative literature for conducting government audits in the United States. The Purple Book and Red Book are not related to government auditing, and while there is a Green Book issued by the Government Accountability Office, it provides guidance on federal financial management, not auditing.

Question 4

Internal audit reports are standardized, as the reporting needs are standardized from company to company.

Accepted Answer

Internal audit reports may vary from company to company, depending on the specific reporting needs and requirements. While there may be some common elements included in internal audit reports, such as an executive summary and detailed findings and recommendations, the format and content may differ based on the nature of the audit and the organization's goals and objectives.

Question 5

Internal auditors can have a significant impact on a company's operational efficiency and effectiveness, but not on earnings and cash flow.

Accepted Answer

Internal auditors can have an impact on earnings and cash flow by identifying and addressing areas of risk and inefficiency, which can ultimately improve the company's bottom line.

Question 6

The New York Stock Exchange requires its registrants to have an internal audit function.

Accepted Answer

This is true, the New York Stock Exchange requires its registrants to have an internal audit function as a part of their overall regulatory requirements.

Question 7

The Institute of Internal Auditors has established Ethical Principles for its members. List each of the principles.

Accepted Answer

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Question 8

Internal auditors and government auditors perform a significant amount of financial auditing, similar to that done by external CPA firms.

Accepted Answer

Internal auditors and government auditors do perform a significant amount of financial auditing, similar to that done by external CPA firms. However, their scope of work may be different in terms of objective, focus, and reporting structure.

Question 9

Internal audit reports are relied on by both internal and external users.

Accepted Answer

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Question 10

What is the Institute of Internal Auditors Professional Practices Framework definition of internal auditing?

Accepted Answer

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Question 11

The Institute of Internal Auditors' Position Paper, "The Role of Internal Auditing in Enterprise-wide Risk Management," highlights six roles internal audit should not undertake within a company related to ERM activities. Name those six roles or activities.

Accepted Answer

The answer of The Institute of Internal Auditors' Position Paper,...

Question 12

Recent research shows the board of directors is delegating oversight of management's enterprise risk management (ERM) responsibilities to the internal audit department in place of a board level committee.

Accepted Answer

The board of directors typically delegates oversight of management's enterprise risk management (ERM) responsibilities to a board-level committee, such as the audit committee or a risk committee, rather than directly to the internal audit department. The internal audit department may play a key role in evaluating the effectiveness of ERM practices, but oversight and governance are generally retained at the board or committee level.

Question 13

The American Institute of Certified Public Accountants (AICPA) has established a highly regarded certification program resulting in the designation of Certified Internal Auditor (CIA).

Accepted Answer

The Certified Internal Auditor (CIA) certification program is established by The Institute of Internal Auditors (IIA), not the American Institute of Certified Public Accountants (AICPA).

Question 14

External auditors typically consider internal auditors effective if they meet three criteria. What are these criteria?

Accepted Answer

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Question 15

When a state or local government agency receives federal funds, it is subject to the audit requirements of
A) 
B) 
C) 
D)

Accepted Answer

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Question 16

What are three similarities between internal and external auditors?

Accepted Answer

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Question 17

The International Standards for the Professional Practice of Auditing list seven performance standards. List three.

Accepted Answer

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Question 18

Statements on Internal Auditing Standards (SIASs) are issued by the Auditing Standards Board of the American Institute of Certified Public Accountants (AICPA).

Accepted Answer

Statements on Internal Auditing Standards (SIASs) are not issued by the Auditing Standards Board of the AICPA. The AICPA issues Statements on Auditing Standards (SASs) for external audits. Internal auditing standards are issued by the Institute of Internal Auditors (IIA).

Question 19

Companies employ their own internal auditors to perform operational auditing, but not financial auditing.

Accepted Answer

Companies often employ their own internal auditors to perform both operational and financial auditing as part of their internal control processes to ensure compliance, efficiency, and financial integrity.

Question 20

Internal auditors do not have the same amount of knowledge about internal controls and the company's operations as the external auditors do.

Accepted Answer

Internal auditors typically have more in-depth knowledge about the company's operations and internal controls because they are employed by the company and work closely with its processes on a daily basis, unlike external auditors who audit the company's financial statements annually or for specific purposes and may not have the same level of detailed insight.

Quiz 26: Internal and Governmental Financial Auditing and Operational Auditing