REVIEW
QUESTIONS
1. What are the three components of the internal
audit value proposition set forth by The IIA?
2. How does The IIA deine internal auditing?
3. What are the four categories of business
objectives discussed in this chapter?
4. What are the deinitions of governance, risk
management, and control provided in this
chapter?
5. What is the difference between internal
assurance services and internal consulting
services?
6. What is the difference between independence and
objectivity as they pertain to internal auditors?
7. What are the three fundamental phases in the
intenal liuiuit engagement, piut-caa:
8. What is the relationship between auditing and
accounting?
9. What is the primary difference between internal
and external inancial reporting assurance
services?
10. What are some of the factors that have fueled the
dramatic increase in demand for internal audit
services over the past 30 years?
11. What types of procedures might an internal
auditor use to test the design adequacy and
operating effectiveness of governance, risk
management, and control processes?
12. What is co-sourcing? Why might an organization
choose to co-source its internal audit function?
13. How is The IIA's leadership organization
structured?
14. What are the two categories of guidance included
in theIPPF?
15. What are the three parts of the CIA exam?
16. What is the major objective of the Internal Audit
Foundation?
17. What are the character traits, known as the 5 Cs,
that are required for success in the internal audit
profession?
18. What are the seven inherent personal qualities
listed in the chapter that are common among
successful internal auditors?
19. Why is it imperative that internal auditors have
iin.cgin.j':
20. How many core competencies are included in
The IIA's Global Internal Auditor Competency
Framework and for what general job levels are
they recommended?
21. What are the three common ways individuals
enter the internal audit profession?
22. Do most people who work in internal auditing
spend their entire careers there? Explain.
23. What options does an individual have if he or she
chooses to be a career internal auditor?
INTRODUCTION TO INTERNAL AUDITING 1- 23
 MULTIPLE-CHOICE
QUESTIONS
Select the best answer for each of the following
questions.
1. Which of the following are components of the
deinition of internal auditing?
a. Independence and objectivity.
b. A systematic and disciplined approach.
c. Helping the organization accomplish its
objectives.
d. All of the above.
2. Assurance, Insight, and Objectivity comprise:
a. The mission of internal auditing.
b. The three lines of defense model.
c. The objectives of internal auditing.
d. The value proposition.
3. Independent outside auditors provide inancial
reporting assurance services primarily for:
a. The beneit of third parties.
b. Management.
c. Board of directors.
d. The CEO.
4. AVF Company's new CFO has asked the company's
CAE to meet with him to discuss the role of the
internal audit function. The CAE should inform the
CFO that the overall responsibility of internal audit
is to:
a. Serve as an independent assurance and consulting
activity designed to add value and improve the
company's operations.
b. Assess the company's methods for safeguarding
its assets and, as appropiate, veify the existence
of the assets.
c. Review the integity of inancial and operating
information and the methods used to accumulate
and report information.
d. Determine whetner tiie company's system of
internal controls provides reasonable assurance
that information is effectively and eficiently
communicated to management.
1-24 INTERNAL AUDITING: ASSURANCE & ADVISORY SERVICES
5. Which of the following statements is not true about
business objectives?
a. Business objectives represent targets of
performance.
b. Establishing meaningful business objectives is a
prerequisite to effective internal control.
c. Establishing meaningful business objectives is a
key component of the management process.
d. Business objectives are management's
means of employing resources and assigning
responsibilities.
6. Within the context of internal auditing, assurance
services are best deined as:
a. Objective examinations of evidence for the
purpose of providing independent assessments.
b. Advisory services intended to add value and
improve an organization's operations.
c. Professional activities that measure and
communicate inancial and business data.
d. Objective evaluations of compliance with policies,
plans, procedures, laws, and regulations.
7- Which of the following is mandatory guidance
within the IPPF?
a. Implementation guidance.
b. Supplemental guidance.
c. The value proposition.
d. The core principles.
8. Which of the following is recommended guidance
within the IPPF?
a. The Deinition of Internal Auditing.
b. The Standards.
c. Supplemental guidance.
d. None of the above.
 MULTIPLE-CHOICE
QUESTIONS
9. The Internal Audit Foundation exists to help audit
leaders, practitioners, students, and academics
experience continuous growth in their careers to
propel them to become:
a. Strong assurance providers.
b. Trusted advisors.
c. Independent outside auditors.
d. CAEs.
10. Which of the following is one of the 5 Cs essential to
success as an internal auditor?
a. Courage.
b. Consistency.
c. Collaboration.
d. Candidness.
11. Which of the following is a framework that can
help individual internal auditors and internal audit
functions assess their current competency levels and
identify areas for improvement?
a. Internal Control - Integrated Framework.
b. International Professional Practices Framework.
c. The Global Internal Auditor Competency
Framework.
d. Enterpise Risk Management Framework.
12. Internal auditors must have competent
interpersonal skills. Which of the following does not
represent an attribute of interpersonal skills?
a. Communication.
b. Leadership.
c. Project management.
d. Team capabilities.
13. While planning an internal audit, the internal
auditor obtains knowledge about the auditee to,
among other things:
a. Develop an attitude of professional skepticism
about management's assertions.
b. Develop an understanding of the auditee's
objectives and isks.
c. Make constructive suggestions to management
concerning internal control improvements.
d. Evaluate whether misstatements in the auditee's
penormance reports snouia De commumcateu to
senior management and the audit committee.
14. Which of the following is the premier certiication
sponsored by The IIA?
a. Certiication in Control Self-Assessment.
b. Certiied Internal Auditor.
c. Certiication in Risk Management Assessment.
d. Certiied Information Systems Auditor.
15. Which of the following is the ultimate position of a
career internal auditor?
a. CEO.
b. CFO.
c. CRO.
d. CAE.
INTRODUCTION TO INTERNAL AUDITING 1- 25
 DISCUSSION
QUESTIONS
1. Deine "value proposition." Explain why it is
important for internal auditors to have a value
proposition. Describe the three components of the
internal audit value proposition set forth by The IIA.
2. Describe the relationship between objectives and
strategies. What is your foremost objective as a
student in this course? Explain your strategy for
achieving this objective.
3. Ina Icandoit has an 8:00 a.m. class each day.
The professor has instilled in the students the
importance of getting to class on time, so Ina has
made this one of her objectives for the semester.
What risks threaten the achievement of Ina's
objective? What controls can Ina implement to
mitigate these risks?
1-26 INTERNAL AUDITING: ASSURANCE & ADVISORY SERVICES
4. Prim Rose owns ive flower shops in the suburbs of
a large Midwestern city. Each shop is managed by
a different person. One of the tests Prim performs
to monitor the performance of his shops is a simple
trend analysis of month-to-month sales for each
shop. Assume that Prim's analysis of the reported
sales performance for his flower shop on Iris Street
shows that monthly sales remained relatively
consistent from January through June. Should Prim
be pleased or concerned about the sales performance
report for the shop on Iris Street over this six-month
[ ' » I 1WV I . 1 , .A j IS I I
5. Discuss:
a. The inherent personal qualities common among
successful internal auditors.
b. The knowledge, skills, and credentials entry-level
internal auditors are expected to possess.
c. Additional knowledge, skills, and credentials
in-charge internal auditors might be expected to
possess.
d. Additional knowledge, skills, and credentials
CAEs might be expected to possess.
 CASES
CASE1
Visit The IIA's website (www.theiia.org). Locate, read,
and prepare to discuss the following items:
A. Frequently asked questions about
internal auditing:
1. How do internal and external auditors differ and
how should they relate?
2. How does internal audit maintain its independence
and objectivity?
3. Is it mandatory to have an internal audit activity?
4. What are the critical skills and attributes of a CAE?
5. What are the skillsets and stafing needs of an inter¬
nal audit activity?
6. What is internal audit's role in preventing, detecting,
and investigating fraud?
7. What services can the internal auditors provide for
the audit committee?
8. What should be the reporting lines for the CAE?
9. What standards guide the work of internal audit
professionals?
10. Why should an organization have an audit committee?
B. The content outlines for the three
parts of the CIA exam.
CASE 2
TeamMate Practice Case: Introduction
TeamMate1 Audit Management System, the world's pre¬
miere audit management system, is used by more than
100,000 auditors and 2,500 organizations worldwide.
TeamMate offers an ecosystem of audit management
tools, of which TeamMate+ offers a complete end-to-end
solution coveing:
A risk assessment tool that enables internal auditors
to assess strategic risks across their organization and
develop a risk-based audit plan.
A complete internal audit documentation approach
that integrates with Microsoft Word, Excel, and Adobe
PDF for extensive workpaper coverage.
Time recording and repoting that accounts for inter¬
nal auditors' full day related internal audit tasks as
well as time spent on other activities.
Issue tracking of outstanding internal audit engage¬
ment work.
Reporting and trending of audit plans, engagements,
issues, and other areas of internal audit data necessary
to monitor the performance of the engagement team
and the organization, and provide insights into future
trends.
Readers ofInternalAuditing: Assurance £2 Advisory Ser¬
vices will be provided opportunities to learn about Team-
Mate+ via a series of four case exercises. The exercises
and the chapters to which they pertain are listed below:
Exercise 1: Assessmentchapter 5, "Business Pro¬
cesses and Risks."
Exercise 2: Project and Internal Controlschapter
6, "Internal Control."
Exercise 3: Project and the Audit Engagement Pro¬
cesschapter 12, "Introduction to the Engagement
Process."
Exercise 4: Issue Trackingchapter 14, "Communi¬
cating Assurance Engagement Outcomes and Per¬
forming Follow-Up Procedures."
Each case exercise will be introduced in the Cases section
of the pertinent chapters and will be dependent upon the
work performed in the previous exercise.
Read the Introduction in the TeamMate Practice Case -
Introduction and familiarize yourself with the organiza¬
tion.
CASE 3
KnowledgeLeader Practice Case:
Introduction
Each case exercise will be introduced in the Cases section
of the pertinent chapter(s) in the textbook. The related
KnowledgeLeader resources for each case can be found
on KnowledgeLeader's University Center at https://www.
KnowledgeLeader.com/University.
KnowledgeLeader is a subscription-based website that
provides audit programs, checklists, tools, resources, and
best practices to help busy professionals save time and
stay on top of business and technology risks.
INTRODUCTION TO INTERNAL AUDITING 1- 27
 CASES

Protiviti offers professors and their students the opportu¬

nity to use the resources available on KnowledgeLeader to
broaden their curriculum and help students further their
studies in internal auditing, IT auditing, and accounting.

Student Instructions
For this course, students will receive a link and conir¬
mation number from their professors to activate their
accounts on KnowledgeLeader. Please note: username
and password information must be kept conidential; the
user may not republish, license, sell, copy, or display any
potion of the service elsewhere, except within the con¬
text of appropriately attributed academic coursework.

Please contact the course instructor with any questions.

1-28 INTERNAL AUDITING: ASSURANCE & ADVISORY SERVICES