Question 1

Discuss each of the three broad categories (types)of operational audits.

Accepted Answer

•Functional.A functional audit deals with auditing one or more functions (e.g.,purchasing)in an organization.
•Organizational.An organizational audit deals with an entire organizational unit,such as a department,branch,or subsidiary.It emphasizes how efficiently and effectively functions interact.
•Special assignments.Special assignment audits arise at the request of management when there is a need to investigate a particular area,such as investigating the possibility of fraud in a division,determining the cause of an ineffective IT system,or making recommendations for reducing the cost of a manufactured product.

Question 2

Operational auditing is the review of an organization for efficiency and effectiveness.Discuss what is meant by the terms "effectiveness" and "efficiency."

Accepted Answer

•Effectiveness refers to the degree to which the organization's objectives and goals are accomplished.
•Efficiency refers to the degree to which costs are reduced without reducing effectiveness.

Question 3

Which of the following statements regarding types of operational audits is likely incorrect?

Accepted Answer

A) A functional audit has the advantage of permitting specialization by auditors. 
B) An advantage of functional auditing is its ability to evaluate interrelated functions. 
C) The emphasis in an organizational audit is on how efficiently and effectively functions interact. 
D) Special operational auditing assignments arise at the request of management. 
A) A functional audit has the advantage of permitting specialization by auditors. 
B) An advantage of functional auditing is its ability to evaluate interrelated functions. 
C) The emphasis in an organizational audit is on how efficiently and effectively functions interact. 
D) Special operational auditing assignments arise at the request of management. B

Question 4

Internal auditors are expected to provide value to the organization through improved operational effectiveness.

Accepted Answer

A) True 
 B)False

Question 5

Auditors can insist that the changes that they recommend as the result of an operational audit be implemented by the company.

Accepted Answer

A) True 
 B)False

Question 6

Statements on Internal Auditing Standards are issued by the

Accepted Answer

A) AICPA. 
B) SEC. 
C) Internal Auditing Standards Board. 
D) Auditing Standards Boards. 
A) AICPA. 
B) SEC. 
C) Internal Auditing Standards Board. 
D) Auditing Standards Boards.

Question 7

The Single Audit Act applies only to audits of state and local governments.

Accepted Answer

A) True 
 B)False

Question 8

Independence is a fundamental ethical principle for internal auditors.

Accepted Answer

A) True 
 B)False

Question 9

For financial auditing,the audit report typically goes to many users of financial statements,whereas operational audit reports are intended primarily for management.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following is a performance standard under the International Standards for the Professional Practice of Internal Auditing?

Accepted Answer

A) proficiency and due professional care 
B) independence and objectivity 
C) requirement that the internal audit must be a CPA 
D) engagement planning 
A) proficiency and due professional care 
B) independence and objectivity 
C) requirement that the internal audit must be a CPA 
D) engagement planning

Question 11

Effectiveness refers to the degree to which costs are reduced without reducing efficiency.

Accepted Answer

A) True 
 B)False

Question 12

Operational audits may be performed by internal auditors and government auditors,but not by external auditors.

Accepted Answer

A) True 
 B)False

Question 13

What are three similarities between internal and external auditors?

Accepted Answer

•Both must be competent as auditors and

Question 14

The Single Audit Act requires that an audit be conducted for recipients who receive total federal funds in any fiscal year of more than

Accepted Answer

A) $1,000,000. 
B) $750,000. 
C) $500,000. 
D) $100,000. 
A) $1,000,000. 
B) $750,000. 
C) $500,000. 
D) $100,000.

Question 15

How do the risk and materiality thresholds change in a government audit compared to a financial statement audit of a public company?

Accepted Answer

The Yellow Book recognizes that in gover

Question 16

Benchmarking is one source of evaluation criteria for completing an operational audit.

Accepted Answer

A) True 
 B)False

Question 17

As compared to a financial audit,an operational audit:

Accepted Answer

A)    
B)    
C)    
D)    
A)    
B)    
C)    
D)

Question 18

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

Accepted Answer

A) purpose of the work 
B) scope of the work 
C) both A and B 
D) neither A nor B 
A) purpose of the work 
B) scope of the work 
C) both A and B 
D) neither A nor B

Question 19

The two most important qualities for an operational auditor to possess are independence and competence.

Accepted Answer

A) True 
 B)False

Question 20

The professional organization which is responsible for providing guidance for internal auditors is the

Accepted Answer

A) Association of Private Auditors. 
B) Institute of Internal Auditors. 
C) American Bar Association. 
D) Association of Internal Auditors. 
A) Association of Private Auditors. 
B) Institute of Internal Auditors. 
C) American Bar Association. 
D) Association of Internal Auditors.

Exam 26: Internal and Governmental Financial Auditing and Operational Auditing

Discuss each of the three broad categories (types)of operational audits.

Operational auditing is the review of an organization for efficiency and effectiveness.Discuss what is meant by the terms "effectiveness" and "efficiency."

Which of the following statements regarding types of operational audits is likely incorrect?

Internal auditors are expected to provide value to the organization through improved operational effectiveness.

Auditors can insist that the changes that they recommend as the result of an operational audit be implemented by the company.

Statements on Internal Auditing Standards are issued by the

The Single Audit Act applies only to audits of state and local governments.

Independence is a fundamental ethical principle for internal auditors.

For financial auditing,the audit report typically goes to many users of financial statements,whereas operational audit reports are intended primarily for management.

Which of the following is a performance standard under the International Standards for the Professional Practice of Internal Auditing?

Effectiveness refers to the degree to which costs are reduced without reducing efficiency.

Operational audits may be performed by internal auditors and government auditors,but not by external auditors.

What are three similarities between internal and external auditors?

The Single Audit Act requires that an audit be conducted for recipients who receive total federal funds in any fiscal year of more than

How do the risk and materiality thresholds change in a government audit compared to a financial statement audit of a public company?

Benchmarking is one source of evaluation criteria for completing an operational audit.

As compared to a financial audit,an operational audit:

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

The two most important qualities for an operational auditor to possess are independence and competence.

The professional organization which is responsible for providing guidance for internal auditors is the

The Demand for Audit and Other Assurance Services

The Cpa Profession

Audit Reports

Professional Ethics

Legal Liability

Audit Responsibilities and Objectives

Audit Evidence

Audit Planning and Analytical Procedures

Materiality and Risk

Fraud Auditing

Internal Control and Coso Framework

Assessing Control Risk and Reporting on Internal Controls

Overall Audit Strategy and Audit Program

Audit of the Sales and Collection Cycle: Tests of Controls

Audit Sampling for Tests of Controls and Substantive Tests of Transactions

Completing the Tests in the Sales and Collection Cycle: Accounts Receivable

Audit Sampling for Tests of Details of Balances

Audit of the Acquisition and Payment Cycle: Tests of Controls,

Completing the Tests in the Acquisition and Payment Cycle:

Audit of the Payroll and Personnel Cycle

Audit of the Inventory and Warehousing Cycle

Audit of the Capital Acquisition and Repayment Cycle

Audit of Cash and Financial Instruments

Completing the Audit

Other Assurance Services

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