cia part 1 21-30
IIA Standard 1000 states that "the charter should - ANS-a. establish the department's
position within the organization;
b. authorize access to records, personnel, and physical properties relevant to the
performance of audits;
c. define the scope of internal auditing activities
The director of a newly formed internal auditing department is in the process of drafting
a formal written charter for the department. Which one of the following items, related to
the operational effectiveness of the internal audit department, should be included in the
charter? - ANS-a. The frequency of the audits to be performed.
b. The manner by which audit findings will be reported.
c. The procedures that the internal auditors will employ in investigating and reporting
fraud.
d. The internal auditors' unlimited access to those records, personnel, and physical
properties that are relevant to the performance of the audits.
ans. d
The chief audit executive (CAE) for a large manufacturing company is considering
revising the department's audit charter with respect to the minimum educational and
experience qualifications required. The CAE wants to require all staff auditors to
possess specialized training in accounting and a professional auditing certification such
as the Certified Internal Auditor (CIA) or the Chartered Accountant (CA). One of the
disadvantages of imposing this requirement would be: - ANS-a. The policy might
negatively affect the department's ability to perform quality examinations of the
company's financial and accounting systems.
b. The policy would not promote the professionalism of the department.
c. The policy would prevent the department from using outside consultants when the
department did not have the skills and knowledge required in certain audit situations.
d. The policy could limit the range of activities that could be audited by the department
due to the department's narrow expertise and backgrounds.
ans d
, Which of the following actions by an internal auditor would violate the IIA Code of
Ethics? - ANS-Attendance at an educational program offered by an auditee to all
employees.
Acceptance of airline tickets from an auditee.
Disclosure, in an audit opinion, of all material facts relevant to the audit area.
Disposal of stock in the company prior to learning of a business downturn.
ans b
The status of the internal auditing function should be free from the impact of
irresponsible policy changes by management. The most effective way to ensure that
freedom is to: - ANS-Have the internal auditing charter approved by both management
and the board of directors.
Adopt policies for the functioning of the auditing department.
Establish an audit committee within the board of directors.
Develop written policies and procedures to serve as standards of performance for the
department.
ans a. Approval of the charter by the board of directors will protect the internal auditing
function from management actions, which could weaken the status of the internal
auditing department (IIA Standard 1000—Purpose, Authority, and Responsibility).
Which of the following involves a violation of the IIA Code of Ethics? - ANS-An auditor
informed a friend in an operating department of the expected closing of that department.
Unlike other employees, the auditors always fly first class to maintain the appearance
of independence.
With the consent of senior management, an auditor accepted a gift from an auditee
department that was given as a reward for finding a major inefficiency.
An auditor accepted a promotional calendar from the sales manager.
ans a. This is a violation of Confidentiality (Rules of Conduct) of the IIA Code of Ethics.
Unlike other employees, the auditors always fly first class to maintain the appearance of
independence. - ANS-Fraternization might be discouraged.
With the consent of senior management, an auditor accepted a gift from an auditee
department that was given as a reward for finding a major inefficiency. -
ANS-Acceptance of a gift with the consent of senior management does not impair the
auditor's judgment.
IIA Standard 1000 states that "the charter should - ANS-a. establish the department's
position within the organization;
b. authorize access to records, personnel, and physical properties relevant to the
performance of audits;
c. define the scope of internal auditing activities
The director of a newly formed internal auditing department is in the process of drafting
a formal written charter for the department. Which one of the following items, related to
the operational effectiveness of the internal audit department, should be included in the
charter? - ANS-a. The frequency of the audits to be performed.
b. The manner by which audit findings will be reported.
c. The procedures that the internal auditors will employ in investigating and reporting
fraud.
d. The internal auditors' unlimited access to those records, personnel, and physical
properties that are relevant to the performance of the audits.
ans. d
The chief audit executive (CAE) for a large manufacturing company is considering
revising the department's audit charter with respect to the minimum educational and
experience qualifications required. The CAE wants to require all staff auditors to
possess specialized training in accounting and a professional auditing certification such
as the Certified Internal Auditor (CIA) or the Chartered Accountant (CA). One of the
disadvantages of imposing this requirement would be: - ANS-a. The policy might
negatively affect the department's ability to perform quality examinations of the
company's financial and accounting systems.
b. The policy would not promote the professionalism of the department.
c. The policy would prevent the department from using outside consultants when the
department did not have the skills and knowledge required in certain audit situations.
d. The policy could limit the range of activities that could be audited by the department
due to the department's narrow expertise and backgrounds.
ans d
, Which of the following actions by an internal auditor would violate the IIA Code of
Ethics? - ANS-Attendance at an educational program offered by an auditee to all
employees.
Acceptance of airline tickets from an auditee.
Disclosure, in an audit opinion, of all material facts relevant to the audit area.
Disposal of stock in the company prior to learning of a business downturn.
ans b
The status of the internal auditing function should be free from the impact of
irresponsible policy changes by management. The most effective way to ensure that
freedom is to: - ANS-Have the internal auditing charter approved by both management
and the board of directors.
Adopt policies for the functioning of the auditing department.
Establish an audit committee within the board of directors.
Develop written policies and procedures to serve as standards of performance for the
department.
ans a. Approval of the charter by the board of directors will protect the internal auditing
function from management actions, which could weaken the status of the internal
auditing department (IIA Standard 1000—Purpose, Authority, and Responsibility).
Which of the following involves a violation of the IIA Code of Ethics? - ANS-An auditor
informed a friend in an operating department of the expected closing of that department.
Unlike other employees, the auditors always fly first class to maintain the appearance
of independence.
With the consent of senior management, an auditor accepted a gift from an auditee
department that was given as a reward for finding a major inefficiency.
An auditor accepted a promotional calendar from the sales manager.
ans a. This is a violation of Confidentiality (Rules of Conduct) of the IIA Code of Ethics.
Unlike other employees, the auditors always fly first class to maintain the appearance of
independence. - ANS-Fraternization might be discouraged.
With the consent of senior management, an auditor accepted a gift from an auditee
department that was given as a reward for finding a major inefficiency. -
ANS-Acceptance of a gift with the consent of senior management does not impair the
auditor's judgment.
