6/15/23, 8:21 PM Activity 1 06222022

Multiple Choice uestions

Select the best answer from each of the following statements (1 point each).

e two most important ualities for an operational auditor are:

academic background and su cient experience.

independence and competence.

competence and technical training.

personality and appearance.

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6/15/23, 8:21 PM Activity 1 06222022

Which of the following statements regarding types of operational audits is false?

A functional audit has the advantage of permitting specialization by auditors.

An advantage of functional auditing is its ability to evaluate interrelated functions.

Special operational auditing assignments arise at the request of management.

The emphasis in an organizational audit is on how e ciently and effectively

functions interact.

Which of the following statements is/are correct? Statement 1 - Independence is a fundamental

ethical principle for internal auditors. Statement 2 - Communication skills are also essential
not only as it relates to fellow auditors, but also process owners and operators. Statement 3 -
Adding value and being perceived as trusted advisors to their organizations are perhaps the
highest aspirations of internal auditors around the world.

Statement 3 only

Statements 1 and 2

Statements 2 and 3

Statements 1, 2, and 3

Internal auditors are responsible to:

neither a nor b

the board of directors

management

both a and b

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6/15/23, 8:21 PM Activity 1 06222022

e following are the similarities between internal and external auditors, except:

Both follow a similar methodology in performing their audits, including planning and
performing tests of controls and substantive tests.

Both functions serve the needs of the management.

Both consider risk and materiality in deciding the extent of their tests and evaluating
results. However, their decisions about materiality and risks may differ, because
external users may have different needs than management or the board.

Both must be competent as auditors and remain objective in performing their work
and reporting their results.

What distinguishes internal control evaluation and testing for nancial and operational
auditing?

Both a and b.

Scope of the work.

Neither a nor b.

Purpose of the work.

Which is not a purpose of an economy and e ciency audit?

The causes of ine ciencies and uneconomical practices.

Whether the entity has complied with laws and regulations concerning matters of
economy and e ciency.

Each of the above is a purpose.

Whether the entity is acquiring, protecting, and using resources economically and
e ciently.

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6/15/23, 8:21 PM Activity 1 06222022

Which of the following statements is/are correct? Statement 1 - Current professional auditing
standards prohibit external auditors from using internal auditors for direct assistance on
external audits. Statement 2 - Current professional auditing standards re uire external
auditors to use internal auditors for direct assistance on external audits.

Statement 2 only

None of the statements

Statements 1 and 2

Statement 1 only

Which of the following is not a di erence between operational auditing and nancial
auditing?

Operational audit reports are usually of a restricted distribution while nancial audit
reports are widely distributed.

None of the above is a difference.

Operational audits often cover non- nancial issues while nancial audits do not.

Both must be CPAs.

e IIA Code of Ethics is based on all but which of the following ethical principles?

Integrity

Competency

Con dentiality

Independence

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6/15/23, 8:21 PM Activity 1 06222022

Which of the following is not one of the three phases in an operational audit?

Planning

Reporting and follow-up

Training and supervising employees

Evidence accumulation and evaluation

Which of the following groups could not be involved in an operational audit?

CPA rms

Internal auditors

Government auditors

None of the above answers is correct; that is, all of the above could be involved

Which of the following is not one of the major di erences between nancial and operational
auditing?

Financial audits deal with the information on the nancial statements, but
operational audits are concerned with the information in the ledgers

The nancial audit is oriented to the past, but an operational audit concerns
performance for the future

Financial audits are limited to matters that directly affect the nancial statements,
but operational audits cover any aspect of e ciency and effectiveness

The nancial audit report is distributed to many readers, but the operational audit
report goes to a few managers

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6/15/23, 8:21 PM Activity 1 06222022

Which of the following tools would best give graphical representation of a se uence of
activities and decision?

Control Chart

Histogram

Flowchart

Gantt Chart

Which of the following can a ect the independence of operational auditors? *

Yes No

Reporting Structure

Responsibilities

Below are the criteria which the external auditors typically consider internal auditors e ective
if they meet the following, except:

All of the above are correct

Have performed relevant audit tests of the internal controls and nancial statements

Competent and well-trained

Independent of the operating units being evaluated

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6/15/23, 8:21 PM Activity 1 06222022

An audit designed to evaluate the e ciency and e ectiveness of an organization or some part
of an organization would not be called a(n):

management audit

operational audit

performance audit

compliance audit

Which of the following is not a similarity between external and internal auditors?

Both must be competent

Both use similar methodologies in performing their work

Both consider risk and materiality in their work

Both must be independent of the company

Which of the following statements is/are correct? Statement 1 - Internal auditors should have
the authority to re uire implementation of su estions for improvement. Statement 2 - One
disadvantage of functional auditing is the failure to evaluate interrelated functions.

Statement 2 only

Statements 1 and 2

Statement 1 only

None of the statements

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6/15/23, 8:21 PM Activity 1 06222022

A typical objective of an operational audit is to determine whether an entity’s:

nancial statements present fairly the results of operations.

internal control is adequately operating as designed.

speci c operating units are functioning e ciently and effectively.

operational information is in accordance with generally accepted government

auditing standards.

External nancial statement auditors must obtain evidence regarding what attributes of an *
internal audit department if the external auditors intend to rely on the internal auditor’s
work?

Yes No

Independence from the Audit

Committee

Competence

To be e ective, an internal audit department must report to: *

Yes No

Operating Departments

The Accounting Department

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6/15/23, 8:21 PM Activity 1 06222022

When conducting interviews during the early stages of an internal audit, it is more e ective to

Take advantage of the fact that fears is an important part of audit

Ask surprise questions about daily procedures

Ask for speci c answers that can be quanti ed

Ask people about their jobs

Which of the following is not one of the broad categories of operational audits?

Functional audits

Special assignment audits

Organizational audits

Single Audit Act audits

Which of the following statements is/are correct? Statement 1 - Operational audits may be
performed by internal auditors and government auditors, but not by external auditors.
Statement 2 - To help them remain independent of the operations they audit, internal auditors
should report directly to the controller.

None of the statements

Statement 1 only

Statement 2 only

Statements 1 and 2

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6/15/23, 8:21 PM Activity 1 06222022

An auditor prepared a working paper that consisted of a list of employees and identi cation
numbers as well as this statement " By matching random numbers with employee
identi cation numbers, 40 employee personnel les were selected to verify that they contain
all documents re uired by company policy. No exceptions were noted". e auditor did not
place any tick marks on the working paper. Which of the following changes would improve the
auditor's working paper the most?

Justi cation for the sample size

Use of tick marks to show that each le was examined.

Listing of the actual documents examined for each employee

Removal of the employee names to protect their con dentiality

Operational auditing is the review of an organization for e ciency and e ectiveness.

Statement 1: E ectiveness refers to the degree to which the organization’s objectives and goals
are accomplished. Statement 2: E ciency refers to the degree to which costs are reduced
without reducing e ectiveness. Which of the following statements is/are correct?

Only statement 1 is correct

Only statement 2 is correct

Both statements are incorrect

Both statements are correct

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6/15/23, 8:21 PM Activity 1 06222022

Statistical sampling would be appropriate to estimate the value of an auto dealer's 3,000 line-
item inventory because statistical sampling is

Complete and precise

Reliable and objective

Thorough and complete

Thorough and accurate

Which of the following statements describes an internal control uestionnaire?

Provides detailed evidenced regarding the substance of the control system

Takes less of the auditee's time to complete than other control evaluation devices

Provides indirect audit evidence that might need corroboration

Requires that the auditor to be in attendance to properly administer it

Before an operational audit for e ectiveness can be performed, there must be:

a nancial audit by an independent auditor.

a review performed by either an independent or an internal auditor.

speci c criteria developed to de ne effectiveness.

a nancial audit by an internal auditor.

This form was created inside of Saint Louis University, Inc..

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6/15/23, 8:21 PM Activity 1 06222022

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