1.4 An internal auditor observes that a receivables clerk has physical access to and controlof cash receipts. This has alerted him but he worked with the clerk several years before andhas a high level of trust in the individual. Therefore, the auditor notes in the working papersthat controls over receipts are adequate. Has the auditor exercised due professional care?1.Yes, reasonable care has been taken.2.No, irregularities were not noted.3.No, alertness to conditions most likely indicative of irregularities was not shown.4.Yes, the working papers were annotated. Show
1.5 In evaluating the effectiveness and efficiency with which resources are employed, aninternal auditor is responsible for... Get answer to your question and much more 1.6 Controls should be designed to ensure that... Get answer to your question and much more ((73))Q:Which of the following engagement procedures provides the best informationabout the collectibility of notes receivable?A. Confirmation of note receivable balances with the debtors.B. Examination of notes for appropriate debtors’ signatures.C. Reconciliation of the detail of notes receivable and the provision for uncollectibleamounts to the general ledger control.D. Examination of cash receipts records to determine promptness of interest andprincipal payments.Answer (A) is incorrect because confirmationestablishes existence, notcollectibility.Answer (B) is incorrect because inspection helps verify the validity (not collectibility)of the notes.Answer (C) is incorrect because reconciliation merely tests bookkeeping procedures.Answer (D) is correct.Thebest information about the collectibility (valuation) ofnotes receivable lies in actual cash collections. Nonpayment or late payment may bearunfavorably on the possibility of collection. An internal auditor also normally sendspositive confirmations to the makers and holders and inspects the notes to veritymaturity dates and other terms.((97)) Q:A bank internal auditor wanted to verify the accuracy of the general ledger balanceof a depository account. One engagement procedure used in this process was to mailpositive confirmations to statistically sampled depositors. However, the number ofreplies received was not adequate to form a valid conclusion about the account’saccuracy. What action should the internal auditor take to accomplish this objective? Get answer to your question and much more In any organization-wide risk management assessment, the CAE should include risks associated with which of the following activities? Environmental. All of the answers are correct. An organization is considering purchasing a commercial property. Because of the location of the property and the known recent history of activities on the property, management has asked the internal audit activity, in cooperation with legal counsel, to provide a preliminary identification of any environmental liability.
The strongest reason supporting management's decision to request such an investigation is The potential for future liability may outweigh an advantages achieved by obtaining the property. The potential for future liability may outweigh an advantages achieved by obtaining the property. Which of the following suggestions for the CAE related EHS auditing is false? The CAE should foster a close working
relationship with the chief environmental officer and coordinate activities with the plan for environmental auditing. At least once every three years, the CAE should schedule a quality assurance review of the environmental audit function if it is
organizationally independent of the internal audit function. Internal auditors are increasingly called on to perform audits related to an organization's environmental stewardship. Which of the following does not describe the objectives of a type of environmental audit? Determine whether environmental management systems are in place and operating properly to manage future
environmental audit.
Determine whether environmental issues are considered as part of economic decisions. What type of audit assesses the environmental risks and liabilities of land or facilities prior to a properly transaction? Pollution prevention audit. Smith Ice Plant (SIP) is located on the Mississippi River. SIP has a history of leaking pollutants into the Mississippi. Among the following environmental risk exposures, which one does, SIP not have to evaluate as part of its organization-wide environmental risk management assessment? History of financial distress. History of financial distress. Which of the following is true about the interaction of the internal audit function and the environmental audit function? If the environmental audit function reports to someone other than the CAE, the CAE should not offer to review the audit plan sine (s)he was not consulted to
do so. The CAE should evaluate whether the environmental auditors are conforming to recognized professional auditing standards and a recognized code of ethics. An engagement objective is to determine if a company's accounts payable contain all outstanding liabilities. Which of the following audit procedures would not be relevant for this objective? Examine supporting documentation of subsequent (after-period) cash disbursements and verify period of liability. Select a sample of accounts payable from the accounts payable listing and verify the supporting receiving reports, purchase orders, and invoices. Which of the following engagement procedures provides the best information about the collectability of notes receivable? Confirmation of note receivable balances with the debtors. Examination of cash receipts records to determine promptness of interest and principal payments. Shipments are made from the warehouse based on customer purchase orders. The matched shipping documents and purchase orders are then forwarded to the billing department for sales invoice preparation. The shipping documents are neither accounted for nor prenumbered. Which of the following substantive tests should be extended as a result of this control weakness? Select sales invoices from the sales register and examine the related shipping documents. Select bills of lading from the warehouse and trace the shipments to the related sales invoices. An engagement to review payroll is least likely to include Tests of computations for gross and net wages. Observing the physical distribution of paychecks. An internal auditor fails to discover an employee fraud during an assurance engagement. The nondiscovery is most likely to suggest a violation of the International Professional Practices Framework if it was the result of a Failure to perform a detailed review of all transactions in the area. Presumption that the internal controls in the area were adequate and effective. Controls should be designed to ensure that Operations are performed efficiently. Operations are performed efficiently. The chief audit executive's responsibility for assessing and reporting on control processes includes Communicating to senior management and the board an annual judgement about internal control. Communicating to senior management and the board an annual judgement about internal control. What should the CAE do if the scope of the internal audit plan is insufficient to permit expression of an opinion about risk management and control? Design more procedures to ensure the audit plan becomes sufficient. The CAE should inform senior management and the board about gaps in audit coverage. Internal auditors may provide consulting services that add value and improve an organization's operations. The performance of theses services Impairs internal auditors' objectivity with respect to an assurance service involving the same engagement client. Should be consistent with the internal audit activity's empowerment reflected in the charter. Which of the following statements is false? A disciplined, systematic evaluation methodology is incorporated in each internal audit activity. The list of services can generally
be incorporated into two broad categories of assurance and consulting. Assurance and consulting are mutually exclusive and do preclude other auditing services such as investigations and nonauditing roles. Who is responsible for determining the methodology to use for classifying engagements within the organization? The chief audit executive. The chief audit executive. .. An internal auditor performed a formal consulting engagement for XYZ Corporation on June 1, Year 1. When is the earliest time the auditor can perform assurance services for XYZ Corporation and be considered independent and objective? January 1, Year 2. Internal auditors should design the scope of work in a consulting engagement to ensure that all of the following will be maintained except Independence. Reengineering is the thorough analysis, fundamental rethinking, and complete redesign of essential business processes. The intended result is a dramatic improvement in service, quality, speed, and cost. An internal auditor's involvement in reengineering should include all of the following except Determining whether the process has senior management's support. Directing the implementation of the redesigned process. Monitoring is an important component of internal control. Which of the following items would not be an example of monitoring? Management regularly compares divisional performance with budgets for the division. Data processing management regularly reconciles batch control totals for items processed with batch controls for items submitted. What is the first phase in the benchmarking process? Organize benchmarking teams. Select and prioritize benchmarking projects. Which of the following statements regarding benchmarking is false? Benchmarking involves continuously evaluating the practices of best-in-class organizations and adapting company processes to incorporate the best of these practices. The benchmarking organization against which a firm is comparing itself must be a direct competitor. Which of the following is an example of business process reengineering? Adding a new machine to the existing production line to speed up production. Redesigning the production line to speed up production. Which of the following evidence is the most reliable evidence corroborated by engagement client management?External information is ordinarily more reliable than the other types of information listed because it is generated from sources independent of the engagement client.
Which one of the following is the most appropriate statement for an engagement objective?Which of the following is an appropriate statement of an engagement objective? To determine whether inventory stocks are sufficient to meet projected sales.
Which of the following is an appraisal activity established within an entity as a service to Theentity?“Internal auditing” means an appraisal activity established within an entity as a service to the entity.
Which type of engagement attempts to measure the accomplishment and relative success of the undertaking?Which type of engagement attempts to measure the accomplishment and relative success of the undertaking? Program-results engagement. obtains information about the costs, outputs, benefits, and effects of a program.
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