QUIZ 6

1. A letter in response to an auditor’s inquiry is an example of

ANS: Testimonial Evidence
2. Which of the following represents the most competent evidence that trade receivables actually
exist?
ANS: Positive Confirmations
3. In advance of a preliminary survey, a chief audit executive sends a memorandum and questionnaire
to the supervisors of the department to be audited. What is the most likely result of that procedure?
ANS: It involves the engagement client's supervisory personnel in the audit.
4. It refers to specific tasks performed by the internal auditor to gather the evidence required to achieve
the prescribed audit objectives
ANS: Audit Procedures
5. To be sufficient, audit evidence should be
ANS: Convincing enough for a prudent person to reach the same conclusion as the auditor.

Evidence used to support audit conclusions are categorized into different types. Enumerate and define the
different types of audit evidence
Your Answer:
a. Interviews/ Inquiry are frequently used technique to gather evidence and opinions. It can help to
define the issues and furnish the evidence to support audit findings.
b. Surveys are structured approaches to gathering information from a large population. It can be
administered in person, by telephone, by internet or by mail.
c. Inspection consists of confirming the existence or status of records, documents or physical assets.
d. Flowcharting is a graphic representation of a process or system. It provides a means for analyzing
complex operations.
2 Types of Flowchart:
- System Flowchart
- Document Flowchart
e. Modeling makes use of mathematical and statistical models designed to simulate real processes
and help in decision- making. Models are identified in terms of their intended uses.
f. Observation entails personally verifying or attesting to a process or procedure.
g. Confirmation is the method of obtaining evidence from third parties regarding specific balances,
contractual terms, etc.
h. Analysis consists of examining information obtained and using it to corroborate other findings or
compare auditee performance against performance indicators and policies.
i. Control Self- Assessment is focused on having the members of a working group identify and
assess the controls that govern their activities. Also, it can serve as a learning opportunity for the
group and can lead to the immediate response of the management in addressing concerns or issues.
j. Risk Self- Assessment is focused on having peer groups or knowledgeable stakeholders identify
the risks associated with one or a group of programs, activities or initiatives.
QUIZ 7
1. In developing an appropriate work program for an audit engagement, the most important factor for
an audit supervisor to consider is the
ANS: Potential impact of risks
2. An audit to test the system of controls over the purchase, distribution, and use of radioactive
material is being conducted at a company's plants. The process is well documented, and employees
in the safety department are very familiar with the department's procedures. Since the purchasing
and facilities departments are involved in the process, the auditor is considering reviewing their
radioactive material-handling procedures as well. The auditor should:
ANS: Adjust the engagement schedule and budget, if needed, and interview the appropriate
individuals in the purchasing and facilities departments to ascertain whether additional
controls exist that complement those identified within the safety department.
3. Which of the following would be the most useful in developing an annual audit plan?
ANS: Risk assessment software
4. To promote a positive image within an organization, a chief audit executive (CAE) adjusted the
audit plan to focus on assurance engagements that highlighted potential costs to be saved. Negative
observations were to be omitted from engagement final communications. Which action taken by
the CAE would be considered a violation of the Standards?
I. The focus of the audit function was changed without modifying the audit charter or
notifying the audit committee.
II. Negative observations were omitted from the engagement final communications.
III. Cost savings and recommendations were highlighted in the engagement final
communications.
ANS: I and III only
5. If an engagement client's operating standards are vague and thus subject to interpretation, the
auditor should:
ANS: Seek agreement with the client as to the standards to be used to measure operating
performance.

The detailed Audit Engagement Process based on IAS has four steps. The four steps in performing an
internal audit are as follows:
Engagement Planning (Standard # 2200)
Performing the Engagement (Standard # 2300)
Communicating Results (Standard # 2400)
Monitoring Progress (Standard # 2500)
Describe each steps mentioned above in 2 to 3 sentences.

Your Answer:
In any engagement, planning plays a vital role in achieving the objectives of the engagement. It is a
continuous process, covering both annual planning for the audit function as a whole and the planning of the
individual audit.
In performing the engagement, it is where internal auditors must analyze, evaluate and document sufficient
information to achieve the engagement's objectives. Also, internal auditors must base conclusions and
engagement results on appropriate analyses and evaluations.
Communication is an integral part of any assurance engagement and occurs on an ongoing basis as the
engagement process. It must be accurate, objective, clear, concise, constructive, complete and timely.

Monitoring is where the CAE must establish and maintain a system to monitor the disposition of results
communicated to management. Also, the disposition of results of consulting engagements to the extent
agreed upon with the client should be monitored by the internal audit activity.

Enumerate and describe the 5 key planning process/activities.

Your Answer:
1. Determine engagement objectives and scope
Important first step in engagement planning
2. Understand the auditee (including auditee objectives)
3. Identify and assess risks
4. Evaluate adequacy of control design
5. Develop a work program
Work program is considered the end product of audit planning.

QUIZ 8
1. Recommendations in an internal audit report are designed to
ANS: Add value to the organization
2. Which of the following describes information typically contained in an internal audit report?
ANS: Summary of major observations, audit plan, and management comments
3. Which of the following statements best describes the internal audit function’s responsibility for
follow-up activities related to a previous engagement?
ANS: Internal auditors should determine if corrective action has been taken and is achieving
the desired results or if management has assumed the risk of not taking the corrective action.
4. Communications is an integral part of an assurance engagement and occurs on an ongoing basis as
the engagement progresses. Results are communicated throughout the span of the engagement
using the following forms of communication, except
ANS: Interview

Based on IIA Standards 2410, the composition of the auditor’s Report or Communication are:
The engagement’s objectives and scope
Applicable conclusions, opinion or audit findings/observation
Recommendations
Action plans or corrective actions

1. The engagement's objective and scope

Scope is the area subject to engagement and its corresponding business objectives. It should state what was
and was not included in the examination and specifies the period of time represented by the activities
examined.
2. Applicable conclusions, opinion or audit findings/observation
Conclusion or opinion must take account of the expectation of the senior management, the board and other
stakeholders. Also, it must be supported by a sufficient and appropriate evidence.

3. Recommendations
The recommendations are designed to add value to the organization. It helps the organization achieve its
goals. It may also relate to effectiveness and efficiency of the operations.

4. Action plans or corrective actions

This contains the action that should be taken by the management about the findings. It is up to the
management whether to proceed with the recommendation or take the risk of not doing any action.