Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

The objectives of internal auditors are considerably broader than the objectives of external auditors.

Accepted Answer

A) True 
 B)False

Question 3

The International Standards for the Professional Practice of Auditing list 7 performance standards. List three.

Accepted Answer

Managing the Internal Audit Ac

Question 4

Which is not a purpose of an economy and efficiency audit?

Accepted Answer

A)  Whether the entity is acquiring, protecting, and using resources economically and efficiently. 
B)  The causes of inefficiencies and uneconomical practices. 
C)  Whether the entity has complied with laws and regulations concerning matters of economy and efficiency. 
D)  Each of the above is a purpose. 
A)  Whether the entity is acquiring, protecting, and using resources economically and efficiently. 
B)  The causes of inefficiencies and uneconomical practices. 
C)  Whether the entity has complied with laws and regulations concerning matters of economy and efficiency. 
D)  Each of the above is a purpose.

Question 5

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 6

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.

Question 7

Governmental Auditing Standards recognize that because of public accountability over governmental activities the acceptable tolerable misstatement as compared to commercial businesses may be:

Accepted Answer

A)  equal. 
B)  lower. 
C)  higher. 
D)  indeterminable. 
A)  equal. 
B)  lower. 
C)  higher. 
D)  indeterminable.

Question 8

A typical objective of an operational audit is to determine whether an entity's:

Accepted Answer

A)  internal control is adequately operating as designed. 
B)  financial statements present fairly the results of operations. 
C)  specific operating units are functioning efficiently and effectively. 
D)  operational information is in accordance with generally accepted government auditing standards. 
A)  internal control is adequately operating as designed. 
B)  financial statements present fairly the results of operations. 
C)  specific operating units are functioning efficiently and effectively. 
D)  operational information is in accordance with generally accepted government auditing standards.

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

Operational audits are often categorized as functional, organizational, or special assignments.

Accepted Answer

A) True 
 B)False

Question 11

Integrity is one of the IIA's ethical principles.

Accepted Answer

A) True 
 B)False

Question 12

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

Accepted Answer

• Functional. A functional audit deals w

Question 13

The primary source of authoritative literature for doing government audits is the:

Accepted Answer

A)  Purple Book. 
B)  Yellow Book. 
C)  Green Book. 
D)  Red Book. 
A)  Purple Book. 
B)  Yellow Book. 
C)  Green Book. 
D)  Red Book.

Question 14

External auditors would consider internal auditors effective if they are:

Accepted Answer

A)  independent of the operating units being evaluated. 
B)  competent and well trained. 
C)  have performed relevant audit tests of the internal controls and financial statements. 
D)  all of the above. 
A)  independent of the operating units being evaluated. 
B)  competent and well trained. 
C)  have performed relevant audit tests of the internal controls and financial statements. 
D)  all of the above.

Question 15

Internal auditors should have the authority to require implementation of suggestions for improvement.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following is not one of the three phases in an operational audit?

Accepted Answer

A)  planning 
B)  training and supervising employees 
C)  evidence accumulation and evaluation 
D)  reporting and follow-up 
A)  planning 
B)  training and supervising employees 
C)  evidence accumulation and evaluation 
D)  reporting and follow-up

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

The correct title of the Yellow Book is:

Accepted Answer

A)  Government Auditing Standards. 
B)  IIA Practice Standards. 
C)  Statement of Responsibilities of Internal Auditing. 
D)  Statement of Standards on Accounting and Review Services. 
A)  Government Auditing Standards. 
B)  IIA Practice Standards. 
C)  Statement of Responsibilities of Internal Auditing. 
D)  Statement of Standards on Accounting and Review Services.

Question 19

Professional guidelines for performing internal audits for companies are not as well-defined as for external audits.

Accepted Answer

A) True 
 B)False

Question 20

The Internal Auditing Standards Board issues Statements on Internal Auditing Standards.

Accepted Answer

A) True 
 B)False

Exam 26: Internal and Governmental Financial Auditing and Operational Auditing

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

The objectives of internal auditors are considerably broader than the objectives of external auditors.

The International Standards for the Professional Practice of Auditing list 7 performance standards. List three.

Which is not a purpose of an economy and efficiency audit?

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

Statements on Internal Auditing Standards are issued by the:

Governmental Auditing Standards recognize that because of public accountability over governmental activities the acceptable tolerable misstatement as compared to commercial businesses may be:

A typical objective of an operational audit is to determine whether an entity's:

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

Operational audits are often categorized as functional, organizational, or special assignments.

Integrity is one of the IIA's ethical principles.

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

The primary source of authoritative literature for doing government audits is the:

External auditors would consider internal auditors effective if they are:

Internal auditors should have the authority to require implementation of suggestions for improvement.

Which of the following is not one of the three phases in an operational audit?

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

The correct title of the Yellow Book is:

Professional guidelines for performing internal audits for companies are not as well-defined as for external audits.

The Internal Auditing Standards Board issues Statements on Internal Auditing Standards.

The Demand for Audit and Other Assurance Services

The CPA Profession

Audit Reports

Professional Ethics

Legal Liability

The CPA Profession

Audit Evidence

Audit Planning and Analytical Procedures

Materiality and Risk

Section 404 Audits of Internal Control and Control Risk

Fraud Auditing

The Impact of Information Technology on the Audit Process

Overall Audit Plan 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 and Balances

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

Completing the Audit

Other Assurance Services

Filters