Internal Audit Function Quiz Questions

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| By Manjit Chodha
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Manjit Chodha
Community Contributor
Quizzes Created: 1 | Total Attempts: 741
| Attempts: 741
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  • 1/10 Questions

    Internal Audit is an independent, objective assurance and consulting activity designed to add value and improve an organization's operations. It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the efficiency of risk management, control, and governance processes.

    • True
    • False
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About This Quiz

This Internal Audit Function Quiz assesses knowledge of the audit's role, responsibilities, and independence within an organization. It evaluates understanding of audit charters, departments, and committees, enhancing governance and financial integrity.

Internal Audit Function Quiz Questions - Quiz

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  • 2. 

    It is an independent appraisal function established within the organization to carry out the role and responsibility defined in the Internal Audit Charter.

    • Internal Audit Department

    • External Audit Department

    • Independent Audit Department

    • None of the above.

    Correct Answer
    A. Internal Audit Department
    Explanation
    The correct answer is Internal Audit Department. An internal audit department is a function within an organization that conducts independent and objective assessments of the organization's operations, controls, and processes. It is established to fulfill the responsibilities outlined in the Internal Audit Charter, which defines the department's role and scope of work. Unlike external audit departments, which are typically independent firms hired by the organization, the internal audit department operates within the organization and reports to management.

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  • 3. 

    It is a formal written statement that defines the approved purpose, authority, and responsibility of the internal audit activity.

    • Internal Audit Plan

    • Internal Audit Charter

    • Internal Audit Program

    • None of the above.

    Correct Answer
    A. Internal Audit Charter
    Explanation
    An internal audit charter is a formal written statement that outlines the purpose, authority, and responsibility of the internal audit activity within an organization. It serves as a guide for the internal audit team, establishing their role and objectives, as well as their independence and reporting lines. The charter helps ensure that the internal audit function operates effectively and efficiently, providing assurance to management and stakeholders that internal controls and risk management processes are in place and functioning properly.

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  • 4. 

    The internal audit function is generally considered independent when it can carry out its work freely and ___________.

    • Efficiently

    • Effectively

    • Objectively

    • All of the above.

    Correct Answer
    A. Objectively
    Explanation
    The internal audit function is generally considered independent when it can carry out its work freely and objectively. Objectivity is crucial for internal auditors as it ensures that their assessments, evaluations, and recommendations are unbiased and based on reliable evidence. By maintaining objectivity, internal auditors can provide impartial and accurate insights into an organization's operations, controls, and risk management processes. This allows them to effectively identify areas for improvement and provide valuable recommendations to enhance the organization's overall governance and control environment.

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  • 5. 

    Related to independence is the assumption that internal auditors have unrestricted access to whatever they might need to make an objective assessment. That includes restricted access to plans, forecasts, people, data, products, facilities, and records necessary to perform their independent evaluations.

    • True

    • False

    Correct Answer
    A. True
    Explanation
    The explanation for the given correct answer is that internal auditors need to have unrestricted access to various resources in order to conduct an objective assessment. This includes access to plans, forecasts, people, data, products, facilities, and records. Without such access, their evaluations may be influenced or biased, compromising their independence. Therefore, it is important for internal auditors to have unrestricted access to ensure their objectivity and independence in their assessments.

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  • 6. 

    ____________________ is an appraisal activity established or provided as a service to the entity. Its functions include, amongst other things, examining, evaluating and monitoring the adequacy and effectiveness of internal control.

    • Internal Audit

    • External Audit

    • Any of the above.

    • None of the above.

    Correct Answer
    A. Internal Audit
    Explanation
    An internal audit is an appraisal activity that is established or provided as a service to the entity. Its main functions include examining, evaluating, and monitoring the adequacy and effectiveness of internal control. This means that the internal audit is responsible for assessing the internal processes and controls within an organization to ensure they are functioning properly and meeting the organization's objectives. This is different from an external audit, which is conducted by an independent third party to provide an opinion on the accuracy of the financial statements. Therefore, the correct answer is Internal Audit.

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  • 7. 

    Statement 1.  External auditors generally consider operations a whole relative to objectives while internal auditors focus primarily on financial systems that have a direct, significant effect on the amounts reported in financial statements. Statement 2.  External auditors consider even small amounts of fraud, waste, and abuse as symptoms of underlying issues. The internal auditor considers just what materially affects the financial statements since that is the nature of their engagement.

    • Only Statement 1 is correct.

    • Only Statement 2 is correct.

    • Both statements are correct.

    • Both statements are wrong.

    Correct Answer
    A. Both statements are wrong.
    Explanation
    The explanation for the answer "Both statements are wrong" is that both statements misrepresent the roles and responsibilities of external auditors and internal auditors. Statement 1 incorrectly states that external auditors focus primarily on objectives, while internal auditors focus on financial systems. In reality, external auditors also assess financial systems and internal controls. Statement 2 incorrectly suggests that internal auditors only consider what materially affects financial statements, whereas they also examine fraud, waste, and abuse, among other things. Therefore, both statements are incorrect.

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  • 8. 

    ____________________  are expected to take a more focused oversight role in respect of risk management and internal control.

    • Internal Auditors

    • Audit Committees

    • External Auditors

    • None of the above.

    Correct Answer
    A. Audit Committees
    Explanation
    Audit committees are expected to take a more focused oversight role in respect of risk management and internal control. This is because audit committees are responsible for ensuring the effectiveness of the organization's internal control systems and risk management processes. They play a crucial role in overseeing the financial reporting process, internal and external audits, and compliance with laws and regulations. By actively monitoring and reviewing the organization's risk management and internal control practices, audit committees help to enhance transparency, accountability, and overall governance within the organization.

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  • 9. 

    Which is not one of the five directives from the IIA's Statement of Responsibilities of Internal Auditing that are included in most charters?

    • Appraise the economy and efficiency with which resources are employed;

    • Review the means of safeguarding assets and, as appropriate, verify the existence of such assets;

    • Review the systems established to ensure compliance with those policies, plans, procedures, laws, regulations, and contracts which could have a significant impact on operations and reports, and determine whether the organization is in compliance;

    • Review the reliability and integrity of financial and operating information and the means used to identify, measure, classify, and report such information;

    • Create operations or programs to ascertain whether results are consistent with established objectives and goals and whether the operations or programs are being carried out as planned.

    Correct Answer
    A. Create operations or programs to ascertain whether results are consistent with established objectives and goals and whether the operations or programs are being carried out as planned.
  • 10. 

    There are three important assumptions implicit in the definition, objectives, and scope for internal auditing. Which is not one of them?

    • The assumption that the internal auditing function is staffed with people possessing the necessary education, experience, and proficiency to perform competently.

    • Auditor independence.

    • The assumption that the evaluations and conclusions contained in internal auditing reports are directed internally to management and the board, not to stockholders, regulators, or the public.

    • The presumption that the evaluations and conclusions contained in internal auditing reports are directed internally to management and the board, not to stockholders, regulators, or the public.

    Correct Answer
    A. The assumption that the evaluations and conclusions contained in internal auditing reports are directed internally to management and the board, not to stockholders, regulators, or the public.
    Explanation
    The correct answer is the assumption that the evaluations and conclusions contained in internal auditing reports are directed internally to management and the board, not to stockholders, regulators, or the public. This assumption is not implicit in the definition, objectives, and scope for internal auditing. The other options are all important assumptions that are implicit in the definition, objectives, and scope for internal auditing.

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Quiz Review Timeline (Updated): Aug 27, 2024 +

Our quizzes are rigorously reviewed, monitored and continuously updated by our expert board to maintain accuracy, relevance, and timeliness.

  • Current Version
  • Aug 27, 2024
    Quiz Edited by
    ProProfs Editorial Team
  • Jan 31, 2018
    Quiz Created by
    Manjit Chodha
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