QUIZ NO.

2
ACCT 1163 – OPERATIONAL AUDITING Date: Feb. 4, 2023

A. True or False: Write “TRUE” or “T” if the statement is correct, and “False” or “F”
if the statement is incorrect. (7 pts.)
1. An audit population is composed of all possible auditable entities which
include a range of programs, activities, functions, structures and initiatives
that collectively contribute to the achievement of organizational objectives. (F
– audit universe)

2. An audit plan for the organization should cover all auditable entities. (F –
resource limitation and prioritization)

3. The advantage of determining auditable entities based on function is having a

clearly defined audit area. (T)

4. Determining auditable entities, and thereby planning audits, using a business

process approach makes it simpler for the audit function to conduct
engagements. (F – more complex)

5. The functional approach to determining auditable entities covers more risk

areas and issues than a business process approach. (F – fewer risk areas)

6. The audit function has already fulfilled its duty to management once it has
completed an engagement and communicated the results. (F – follow-up
audit must also be done)

7. The purpose of the SAPG is to guide the auditor through an examination of

the issues specific to the system or activity with the intention of recording the
nature of measures and controls in place to ensure either that the business
objectives are achieved, or that risks and exposures are successfully avoided.
(T)
QUIZ NO. 2
ACCT 1163 – OPERATIONAL AUDITING Date: Feb. 4, 2023

B. Multiple Choice: Choose the letter represents the best answer. (10 pts.)
1. Which of the following situations is poses a process weakness?

Situation 1: The warehouse manager receives the goods delivered by the

supplier in the inventory warehouse, signs the supplier’s delivery receipt, and
maintains a record for monitoring.
Situation 2: Before the pandemic, the Finance Team perform a quarterly
management review meeting to identify risks and assess the effectiveness of
actions in response to the identified risks. During the pandemic, the team
introduced new modes of payment to immediately address the demand of
clients for alternative ways for payment given the travel restrictions. The
quarterly management review meetings were temporarily deferred to
accommodate client transactions and concerns, anyway the management
team is assured of the online platforms used for alternative modes of
payment.
a. Situation 1 only
b. Situation 2 only
c. Neither of them
d. Both

2. The following business process is concerned with the utilization and

management of organizational resources to create a service or good that will
be exchanged for cash.
a. Revenue process
b. Expenditure process
c. Conversion process
d. Treasury process

3. Which of the following is not an activity under the expenditure process?

a. Procurement
b. Payment of Accounts Payable
c. Warehousing/Storage
QUIZ NO. 2
ACCT 1163 – OPERATIONAL AUDITING Date: Feb. 4, 2023

d. Shipping/Delivery

4. Which of the following processes is most closely related to the financial

reporting process?
a. Corporate framework process
b. Revenue process
c. Expenditure process
d. Information process

5. Which of the following precedes all other activities of audit planning?

a. Determining the audit budget
b. Identifying and assessing the relevant risks
c. Defining the audit procedures
d. Communicating the audit

6. The following are the objectives of audit fieldwork, except:

a. Verify that the controls in place are performing as designed by the audit
function – SHOULD BE DESIGNED BY MGT.
b. Determining if the process or program under review is designed effectively
so that the related goals and objectives are likely to be achieved
c. Identify problem areas where improvements may be implemented for
efficiency and effectiveness of operations
d. Obtain sufficient and competent evidence to support management
assertions

7. This attribute of an audit finding is a significant consideration in addressing

the likelihood that the finding will recur.
a. Condition
b. Recommendation
c. Cause
d. Effect
QUIZ NO. 2
ACCT 1163 – OPERATIONAL AUDITING Date: Feb. 4, 2023

8. Criteria, as an attribute of an audit finding, relates to the benchmark or

standard of what should exist or occur. Which of the following is not a
suitable criteria in an operations audit?
a. Policies and procedures
b. Regulatory requirements
c. Objectives, goals and targets
d. Mission and Vision statements

9. Recurring audit findings indicate that:

i. No follow-up procedures were conducted
ii. The action taken in response to the audit finding did not address its root
cause
iii. Inconsistent implementation of the recommended action
iv. The audit finding and recommendation is not acknowledged by
management

a. i, ii, and iii

b. ii, iii and iv
c. i, ii and iv
d. all of the above

10. This audit procedure involves looking at a transaction/activity from the source
to its destination or end point.
a. Vouch
b. Trace
c. Foot
d. Reconcile

C. Essay: Give at least one (1) hallmark of a good business process and explain
why. (3 pts.)