Exam 16: Internal Audits, Governmental Audits, and Fraud Examinations

Explain briefly the purpose and requirements under the Single Audit Act.

To ensure an internal auditor's independence it is preferable for the internal auditor to report directly to the audit committee.

Internal auditing is an independent,objective assurance and consulting activity designed to provide and opinion on the fair presentation of financial information.

The proper organizational role of internal auditing is to

Independence permits internal auditors to render impartial and unbiased judgments.The best way for internal audit departments to achieve independence is through

A person testifying about findings during litigation support,application of accounting principles,or application of auditing standards is called a(n)_________________________________. Question also found in study guide

Which of the following is a difference between performing an audit and performing a fraud examination?

Internal audit findings should always include ___________________,___________________,___________________,___________________,and ___________________. Question also found in study guide

The federal law that established uniform requirements for audits of federal assistance provided to state and local governments is called

During the audit of a corporation's major division,an auditor interviewed an accounting clerk.The clerk told the auditor that she believes that the division has been capitalizing research and development expenses (GAAP requires that all R&D costs be charged to ordinary expense in the period in which they are incurred).R&D is a significant part of the division's budget.If this information is found to be true,the division may have to expense millions of dollars previously capitalized and significantly reduce its operating profit.The auditor has not performed any testing to determine whether this problem actually exists but has discussed the potential problem with the division controller and you,the director of internal audit. The following day,you received the following e-mail from the company president: The controller of Division B informs me that you have discovered a questionable account classification dealing with research and development expense.I am aware of the issue.You are directed to discontinue any further investigation of this matter until I inform you to proceed.Under the confidentiality standard of your profession,I also direct you not to discuss this matter with other managers,the audit committee,or the outside auditors. As the director of internal audit,write a short memo in response to the president's e-mail.Be sure to explain the position you are taking and why this position is appropriate.

Which of the following would not be an objective of a fraud investigation?

A GAO audit report entitled Aviation Safety: Safer Skies Initiative Has Taken Initial Steps to Reduce Accident Rates by 2007 is most likely a report based on work the auditors performed during a

Fraud examination requires the individual to have expertise in ____________________ and ______________________________. Question also found in study guide

Government performance audits determine if _________________________________________________________ and _______________________________________________. Question also found in study guide

Compliance auditing refers to the process of ensuring that a company is operating within _________________,___________________,and _________________________. Question also found in study guide

When auditors report on a financial audit engagement in accordance with generally accepted government auditing standards (GAGAS),the basic report(s)include a

Which of the following auditors is responsible for designing and planning an audit to detect material illegal acts and frauds?

Fraud examiners must be concerned with the integrity of the evidence that they find.Preserving the evidence is called

The auditing standards of the Institute of Internal Auditors required internal auditors to follow the ethics standards established by the AICPA.

Internal audit reports are usually considered "____________________" until a _________________________ is performed. Question also found in study guide