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ACC 451 Chapter 1
Terms in this set (17)
What are the factors that have fueled the increase in demand for IA services? (6)
1. Globalization: increasingly complex corporate structures
2. E-commerce/other technological advances
3. Devastating corporate scandals
4. A groundswell of new laws and regs
5. To allow managers to know that things are running according to expectations and plans
6. Stakeholders demand accountability.
What are the 3 components of the IA value proposition set forth by the IIA?
1. Assurance on organization's governance (leadership) , risk management (managers/staff day to day actions)t, control processes
2. Insight on the effectiveness/ efficiency of governance, risk management, and internal control processes
3. Objective sources of independent evaluation/ advice
Define internal auditing
A systematic and disciplined process by an entity's board, management and others designed to:
1. Help company accomplish its objectives
2. Evaluate and improve the effectiveness of risk management, control, and governance processes
3. Add value and improve operations through assurance and consulting activities
4. (In order to) Maintain independence and objectivity
What are the 3 fundamental phrases in the internal auditing engagement process?
3. Communicate (slide 16)
What is the relationship between accounting and auditing?
- Not a subset of accounting (different concepts)
-Review the measurements and communications of accounting for proprietary (task)
-Analytical, not constructive
-Critical, investigative, concerned with the basis for accounting measurements and assertions (focus)
-Emphasizes proof, the support for financial statements and data
-Summarizes business activities of great detail into understandable info (focus)
-Recording, reporting, summarizing, communicating (task)
What is(are) the primary differences between internal auditing (IAF) and external financial reporting assurance services (CPA)?
- External= 3rd party decisions makers
-Internal= BOD +top management
2) Relationships to organizations (audit clients)
-External= Not part of the organization
-Internal= Part of the organization
3) Scope of work
-External= provide opinion on the org's financial statements
-Internal= Comprehensive, that serve the org by helping it accomplish its objectives
What is(are) the primary similarities between internal auditing (IAF) and external financial reporting assurance services (CPA)?
1) Share mutual interest regarding the effectiveness of internal financial controls
2) Share common audit skill sets and procedures
3)Both adhere to code of ethics and professional standards
The proper organizational role of internal auditing is to
Serve as an independent, objective assurance and consulting activity that adds value to operations.
While planning an internal audit, the internal auditor obtains knowledge about the auditee to, among other things:
Develop an understanding of the auditee's objectives and risk
Within the context of internal auditing, assurance services are best defined as:
Objective examinations of evidence for the purpose of providing independent assessments
Internal audit activities may involve which of the following:
a. Assurance services.
b. Consulting services.
c. Both assurance and consulting services. Correct
d. Neither assurance nor consulting services.
C. Both assurance and consulting services.
Which of the following are closely related to engagement objectives?
I. The engagement work program
II. Engagement communications
III. The engagement plan
I, II, and III
Internal auditing is an assurance and consulting activity. An example of an assurance service is a(n)
The chief audit executive (CAE) is best defined as the
Person responsible for the internal audit function.
A major reason for establishing an internal audit activity is to
Evaluate and improve the effectiveness of control processes
What is the most accurate term for the procedures used by the board to oversee activities performed to achieve organizational objectives?
The actions taken to manage risk and increase the likelihood that established objectives and goals will be achieved are best described as
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