Question 1

Statements on Internal Auditing Standards are issued by the:

Accepted Answer

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

Question 2

Independence is a fundamental ethical principle for internal auditors.

Accepted Answer

A) True 
 B)False  False

Question 3

Internal Auditors are expected to add value to the organization through improved operational effectiveness.In addition, their responsibilities include all the following except:

Accepted Answer

A) reviewing the reliability and integrity of information. 
B) ensuring compliance with the company's accounting policies. 
C) verifying accounting information for external users. 
D) ensuring compliance with applicable governmental regulations. 
A) reviewing the reliability and integrity of information. 
B) ensuring compliance with the company's accounting policies. 
C) verifying accounting information for external users. 
D) ensuring compliance with applicable governmental regulations. C

Question 4

An operational auditor may use "engineered standards" as an evaluation criteria.

Accepted Answer

A) True 
 B)False

Question 5

As compared to a financial audit, an operational audit:

Accepted Answer

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

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

External auditors typically consider internal auditors effective if they meet three criteria.What are these criteria?

Accepted Answer

External auditors typically consider int

Question 8

Government auditing standards are included in the Yellow Book.

Accepted Answer

A) True 
 B)False

Question 9

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

Accepted Answer

•Functional.A functional audit deals wit

Question 10

Operational auditors must accumulate sufficient appropriate evidence to provide a basis for a conclusion about the objectives being tested.

Accepted Answer

A) True 
 B)False

Question 11

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.

Question 12

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 13

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 14

When a state or local government agency receives federal funds, it is subject to the audit requirements of:

Accepted Answer

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

Question 15

Effectiveness is concerned with whether defined goals are achieved, whereas efficiency is concerned with whether the goals are achieved with a minimum use of resources.

Accepted Answer

A) True 
 B)False

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

Operational audits are primarily geared towards improving a company's operational efficiency and effectiveness.

Accepted Answer

A) True 
 B)False

Question 18

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

Accepted Answer

A) Both must be independent of the company. 
B) Both must be competent. 
C) Both follow a similar methodology in performing their audits. 
D) Both consider risk and materiality deciding the extent of their tests and evaluating results. 
A) Both must be independent of the company. 
B) Both must be competent. 
C) Both follow a similar methodology in performing their audits. 
D) Both consider risk and materiality deciding the extent of their tests and evaluating results.

Question 19

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

Accepted Answer

A) APA. 
B) IIA. 
C) ABA. 
D) AIA. 
A) APA. 
B) IIA. 
C) ABA. 
D) AIA.

Question 20

Which of the following is not one of the major differences between financial and operational auditing?

Accepted Answer

A) The financial audit is oriented to the past, but an operational audit concerns performance for the future. 
B) The financial audit report has widespread distribution, but the operational audit report has limited distribution. 
C) Financial audits deal with the information on the financial statements, but operational audits are concerned with the information in the ledgers. 
D) Financial audits are limited to matters that directly affect the fairness of the financial statement presentation, but operational audits cover any aspect of efficiency and effectiveness. 
A) The financial audit is oriented to the past, but an operational audit concerns performance for the future. 
B) The financial audit report has widespread distribution, but the operational audit report has limited distribution. 
C) Financial audits deal with the information on the financial statements, but operational audits are concerned with the information in the ledgers. 
D) Financial audits are limited to matters that directly affect the fairness of the financial statement presentation, but operational audits cover any aspect of efficiency and effectiveness.

Exam 26: Internal and Governmental Financial Auditing and Operational Auditing

Statements on Internal Auditing Standards are issued by the:

Independence is a fundamental ethical principle for internal auditors.

Internal Auditors are expected to add value to the organization through improved operational effectiveness.In addition, their responsibilities include all the following except:

An operational auditor may use "engineered standards" as an evaluation criteria.

As compared to a financial audit, an operational audit:

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

External auditors typically consider internal auditors effective if they meet three criteria.What are these criteria?

Government auditing standards are included in the Yellow Book.

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

Operational auditors must accumulate sufficient appropriate evidence to provide a basis for a conclusion about the objectives being tested.

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

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

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

When a state or local government agency receives federal funds, it is subject to the audit requirements of:

Effectiveness is concerned with whether defined goals are achieved, whereas efficiency is concerned with whether the goals are achieved with a minimum use of resources.

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

Operational audits are primarily geared towards improving a company's operational efficiency and effectiveness.

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

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

Which of the following is not one of the major differences between financial and operational auditing?

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

Internal Control, Control Risk, and Section 404 Audits

Fraud Auditing

The Impact of Information Technology on the Audit Process

Overall Audit Strategy and Audit Program

Audit of the Sales and Collection Cycle: Tests of Controls and Substantive Tests of Transactions

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, Substantive Tests of Transactions, and Accounts Payable

Completing the Tests in the Acquisition and Payment Cycle: Verification of Selected Accounts

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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