Professional Documents
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Ac 332
Ac 332
Statement 1: Risk factors may be helpful in selecting audit objects and identifying how often
this should be audited. Statement 2: Risk is static concept, it does not change.
Approving audit plans, scheduling, staffing and meeting with the internal auditor as
needed
Reviewing copies of the procedures manuals for selected company operations and
meeting with company officials to discuss them
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6/23/23, 8:30 PM Midterm Quiz 1 - ACELEC 332 (Short-term AY 2021-2022)
The auditors’ approach to determining the sufficiency, relevance, and competence of evidence
depends on the source of the information that constitutes the evidence. Which of the
following statements is incorrect regarding information sources of evidence?
Auditors can use data gathered by the auditee as part of their evidence. If those data
are insignificant to the overall body of evidence supporting their findings, auditors
should obtain additional evidence regarding the reliability of those data.
The auditors’ evidence may also include data gathered by third parties. In some
cases, these data may already have been audited, or the auditors may be able to
audit this evidence themselves. Often, however, it is not practical to obtain evidence
of the data’s validity and reliability.
Data gathered by the auditors include the auditors’ own observations and
measurements. Among the methods for gathering these types of data are
questionnaires, structured inter views, and direct observations.
Auditors should obtain sufficient evidence that computer-processed data are valid
and reliable when those data are significant to the overall body of evidence
supporting the auditors’ findings and any conclusions or recommendations.
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6/23/23, 8:30 PM Midterm Quiz 1 - ACELEC 332 (Short-term AY 2021-2022)
Which of the following statements are correct regarding risk assessment as the term is used in
internal auditing? Choose all the items that apply to this statement.
The internal audit activity should only become involved if the chief audit executive
has sufficient evidence that the follow-up is not occurring.
The internal audit activity should become involved only if specifically requested by
management or the board of directors.
The internal audit activity should establish a monitoring process to review the
adequacy and effectiveness of management’s follow-up actions.
The internal audit activity should have no role in this process in order to ensure
independence.
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6/23/23, 8:30 PM Midterm Quiz 1 - ACELEC 332 (Short-term AY 2021-2022)
One or more or neither of the statements below are incorrect statement(s) about “planning.”
Choose all the incorrect statements by clicking the box next to it or choose “none of the above
statements are incorrect” if you believe otherwise.
Audit working papers aid in the planning, performance, and review of audits.
In planning a system of internal controls, the role of the internal auditor is to create
the procedures for the planning process.
In planning an audit, an on-site survey could assist with evaluating the effectiveness
of the system of internal controls.
While audit risk should be considered in planning the audit, the nature and extent of
audit risk should be documented in the audit work papers, specifically in the
planning section.
Appraising the economy and efficiency with which resources are employed
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6/23/23, 8:30 PM Midterm Quiz 1 - ACELEC 332 (Short-term AY 2021-2022)
II only.
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6/23/23, 8:30 PM Midterm Quiz 1 - ACELEC 332 (Short-term AY 2021-2022)
Employees using personal computers have been reporting occupational injuries and claiming
substantial workers’ compensation benefits. Working papers of an operational audit to
determine the extent of company exposure to such personal injury liability should include.
Listing of all personal computers in use and the employees who are assigned to use
them.
Best evidence is often referred to as primary evidence and is the evidence that is the most
natural and reliable. It is confined to documentary evidence and applies to proof of the
content in writing. Listed below are examples of best evidence, except:
The audit procedure providing the best evidence about the collectibility of notes
receivable would be an examination of cash receipts records to determine
promptness of interest and principal payments.
In testing the write-off of a deteriorated piece of equipment, the best evidence of the
condition of the equipment would be a physical inspection of the actual piece of
equipment.
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6/23/23, 8:30 PM Midterm Quiz 1 - ACELEC 332 (Short-term AY 2021-2022)
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6/23/23, 8:30 PM Midterm Quiz 1 - ACELEC 332 (Short-term AY 2021-2022)
One or more or none of the statements below are correct statements about the “flowcharts.”
Choose all the correct statements by clicking the button or choose “none of the above
statements are correct” if you believe otherwise.
Flowcharts would be most appropriate during the preliminary stage of an area that
has not previously been audited. Flowcharts help auditors in evaluating internal
control systems.
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6/23/23, 8:30 PM Midterm Quiz 1 - ACELEC 332 (Short-term AY 2021-2022)
Using test data, an auditor has processed both normal and atypical transactions
through a computerized payroll system to test calculations of regular and overtime
pay amounts. Sufficient competent evidence of controls exists if test data results are
compared to predetermined results or expectations.
If the audit objective is to gain evidence that payment actually has been made for a
specific invoice from a vendor, the most persuasive evidence would be obtained by a
canceled check, made out to the vendor and referenced to the invoice, included in a
cutoff bank statement that the auditor received directly from the bank.
Verifying the quantity of fixed assets on hand by physical observation would provide
the most persuasive evidence of quantity per record.
The audit procedure that provides the most persuasive evidence about the loan’s
collectibility is to examine the documentation of a recent, independent appraisal of
the real estate that was used a security.
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6/23/23, 8:30 PM Midterm Quiz 1 - ACELEC 332 (Short-term AY 2021-2022)
Evidence is competent to the extent that it is consistent with fact (i.e., evidence is competent
if it is valid). Competent evidence is satisfied by an original signed document, but copies do
not provide competent evidence. Listed below are examples of competent evidence, except:
A contract dispute has arisen between a company and a major supplier. To resolve
the dispute, the most competent evidence would be the original contract.
In deciding whether recorded sales are valid, most “competent” evidence would be
obtained by looking at the shipping document, the independent bill of lading, and the
invoice for the merchandise.
An auditor reviews the procedures for a new electronic data interchange connection
to a major customer before it is implemented.
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6/23/23, 8:30 PM Midterm Quiz 1 - ACELEC 332 (Short-term AY 2021-2022)
Review the expenditure items and match each item with the expenses incurred.
Ensure that all financial information related to the audit is included in the audit plan
and examined for nonconformance or irregularities.
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6/23/23, 8:30 PM Midterm Quiz 1 - ACELEC 332 (Short-term AY 2021-2022)
Automated work paper software helps auditors to increase efficiency and productivity because
it relieves the boredom of writing out by hand. The software automatically refers to audit work
program sections and related audit objectives. Any corrections or changes can be done with
ease and without losing the continuity. Automated documentation aids include:
Computer data file translation software packages, which read the data file
descriptions in the computer program and convert them into a convenient and
readable format (tabular and graphic).
Automated flowchart software packages, which read the source code for a
computer program and convert it into an easy-to-read flowchart.
JCL software packages, which depict the job control flow as a graph or table
showing the sequence of jobs or steps executed and indicating their procedure
names and numbers.
The reliability of questionnaire results tests whether a question always gets the same results
when repeated under similar conditions. Answers can be highly-reliable without being either
verified or valid. A reliable measure is one that, used repeatedly in order to make observations,
produces consistent results. Which of the following statements is incorrect?
Testing reliability is difficult and expensive, because auditors have to either replicate
the data collection or return to those who were questioned before. People do not like
to be retested.
The procedures for testing the reliability of answers are the same from those for
verifying answers.
To test reliability, auditors have to administer the same test to the same source.
When information is verified, auditors usually go to a different source for the same
information or use a different technique on the same source, such as observations
or in-depth interviews.
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6/23/23, 8:30 PM Midterm Quiz 1 - ACELEC 332 (Short-term AY 2021-2022)
Outstanding Issues
Other:
It specifies the minimum resources needed for the internal audit activity.
It defines the authorities and responsibilities for the internal audit activity.
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6/23/23, 8:30 PM Midterm Quiz 1 - ACELEC 332 (Short-term AY 2021-2022)
Continuing on an audit assignment at a division for which the auditor will soon be
responsible as the result of a promotion.
Discussions with senior managers should be conducted in an open manner and focus on the
following, except:
Identifying the minimum risk they face in achieving the organization’s objective.
The result of internal and external audit work is carried out during the year
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6/23/23, 8:30 PM Midterm Quiz 1 - ACELEC 332 (Short-term AY 2021-2022)
The internal auditor is considering performing risk analysis, as a basis for determining which
areas of the organization ought to be examined. Which of the following statements is incorrect
regarding risk analysis? Choose all the items that apply to this statement.
The highest risk assessment should always be assigned to the area with highest
probability of occurrence.
The extent to which management judgements are required in an area could serve as
a risk factor in assisting the auditor in making a comparative risk analysis.
The highest risk assessment should always be assigned to the area with the largest
potential loss.
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6/23/23, 8:30 PM Midterm Quiz 1 - ACELEC 332 (Short-term AY 2021-2022)
An audit manager responsible for the supervision and review of other auditors needs the
necessary skills and knowledge. Which of the following describe a skill or knowledge necessary
to supervise a particular assignment? Choose all the items that apply to this statement.
Determining that staff auditors have completed the audit procedures and that audit
objectives have been met.
Using risk assessment and other judgmental processes to develop an audit plan and
schedule for the department and present the plan to the audit committee
Ensuring that an audit report is supported and accurate relative to the evidence
documented in the working papers of the audit
The ability to review and analyze an audit program to determine if the proposed audit
procedure will result in evidence relevant to the audit’s objectives
One or more or neither of the statements below are incorrect statement(s) about “fieldwork.”
Choose all the incorrect statements by clicking the box next to it or choose “none of the above
statements are incorrect” if you believe otherwise.
Creating working papers that document the audit is a work performed during
fieldwork.
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6/23/23, 8:30 PM Midterm Quiz 1 - ACELEC 332 (Short-term AY 2021-2022)
A question is biased when it causes interviewees to answer in a way that does not reflect their
true positions on an issue. An interviewee may or may not be aware of the bias. Problems
result when the interviewees are:
Unaware of the bias and influenced to respond in the way that is directed by the
wording.
Aware of the bias and deliberately answer in a way that does not reflect their
opinions.
Statement 1: Risk based audit program should formally documented and supported with
written analysis of risk. Statement 2: Risk based audit program should exclude profiles of
significant business units, departments and products that identify business and control risk
and document the structure of risk management and internal control systems.
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6/23/23, 8:30 PM Midterm Quiz 1 - ACELEC 332 (Short-term AY 2021-2022)
Which actions are required to implement risk based-planning under no risk management in
place?
Develop a strategy document that supports the choices made and explains the
methodology used and judgements made to arrive at decisions.
Discuss approach with managers and obtain agreement on the way risks are being
scored
Identifying events that may give rise to risk and opportunities across the audit
universe
Which of the following operational risk falls under Capacity? Choose all the items that apply
to this statement.
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6/23/23, 8:30 PM Midterm Quiz 1 - ACELEC 332 (Short-term AY 2021-2022)
Statement 1: Top Down Risk Assessment considers impact and likelihood of occurrence.
Statement 2: Bottom Up Risk Assessment evaluates risk on a common basis.
One or more or neither of the statements below are incorrect statement(s) about the role of
the Chief Audit Executive (CAE) during the planning stage. Choose all the incorrect
statements by clicking the box next to it or choose “none of the above statements are
incorrect” if you believe otherwise.
The chief audit executive must review and adjust the plan, as necessary, in response
to changes in the organization’s business, risks, operations, programs, systems, and
controls
The chief audit executive must identify and consider the expectations of senior
management, the board, and other stakeholders for internal audit opinions and other
conclusions.
The chief audit executive consults with senior management and the board and
obtains an understanding of the organization’s strategies, key business objectives,
associated risks, and risk management processes.
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6/23/23, 8:30 PM Midterm Quiz 1 - ACELEC 332 (Short-term AY 2021-2022)
The decision to use a questionnaire should be made only after carefully considering the
comparative advantages and disadvantages of the various ways of administering a
questionnaire over other data collection techniques. The following statements relate to when
to use questionnaires, except:
Questionnaires are usually more versatile than other methods. They can be used to
collect more types of information from a wider variety of sources than other
methods because they use people, who can report facts, figures, amounts, statistics,
dates, attitudes, opinions, experiences, events, assessments, and judgments during
a single contact.
Questionnaires can be useful when the auditor needs a cost-effective way to collect
a large amount of standardized information, when the information to be collected
varies in complexity, when a large number of auditees are needed, when different
populations are involved, and when auditees in those populations are in widely
separated locations.
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6/23/23, 8:30 PM Midterm Quiz 1 - ACELEC 332 (Short-term AY 2021-2022)
Statement 1: Risk assessment should be well documented and dynamic, reflecting changes to
the system of internal controls, infrastructure, work processes and new/ changed business lines
or laws and regulations. Statement 2: A high-level summary of risk assessment results should
be provided to the audit committee and include the most significant risks facing the
institution, as well as how those risks have been addressed in the audit plan
Ensure non-bias.
Ensure understanding.
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6/23/23, 8:30 PM Midterm Quiz 1 - ACELEC 332 (Short-term AY 2021-2022)
Internal auditing has evolved to verifying the existence of assets and reviewing the
means of safeguarding assets
Internal auditing involves appraising the economy and efficiency with which
resources are employed
Forms
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