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ACC 451 Chapters 1-4

Terms in this set (132)

What are the three components of the internal audit value proposition set forth by The IIA?
a. Assurance -
i. provides assurance on governance, risk management, and control processes
b. Insights -
i. Catalyst for improving the effectiveness and efficiency by providing insight and recommendations based on analysis and assessments of data and business process.
c. Objectivity -
i. By having integrity and accountability, internal audit problems value as an objective source of independent advice.
How does The IIA define internal auditing?
Internal Auditing 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 bring a systematic, disciplined-approach to evaluate and improve the effectiveness of risk management, control, and governance processes.
What are the four categories of business objectives discussed in this chapter?
a. Strategic Objectives
b. Operational Objectives
c. Reporting Objectives
d. Compliance Objectives
What are the definitions of governance, risk management, and control provided in this chapter?
a. Governance is conducted by the board of directors to authorize, direct, and oversee management toward the achievement of the organization's objectives.

b. Risk management (interlinked with governance) is the process conducted by management to understand and deal with uncertainties (risks and opportunities) that could affect the organization's ability to achieve its objectives.

c. Control (embedded in risk management) is the process conducted by management to mitigate risks to acceptable levels.
What is the difference between internal assurance services and internal consulting services?
a. Internal assurance services is to assess evidence relevant to subject matter of interest to someone and provide conclusions regarding the subject matter.

i. Involve three parties: the auditee, the internal auditor, and the user.

b. The purpose of internal consulting services is to provide advice and other assistance, generally at the specific request of engagement customers.

i. Involve two parties: the internal auditor and the customer.
What is the difference between independence and objectivity as they pertain to internal auditors?
Independence - organization status

Objectivity - Mental Attitude
What are the three fundamental phases in the internal audit engagement process?
a. Planning engagement

b. Performing the engagement

c. Communicating engagement outcomes
What is the relationship between auditing and accounting?
a. The relationship of auditing to accounting is very close, yet there nature is very different; they are business associates, not parent and child.
b. Accounting
i. Accounting includes collection, classification, summarization, and communication of financial data.
ii. It involves the measurement and communication of business events and conditions as they affect and represent a given enterprise or other entity.
iii. The task of accounting is to reduce a tremendous mass of detailed information to manageable and understandable proportions.
c. Auditing
i. Is similar to accounting BUT it DOES NOT have the task of measuring or communicating them.
ii. Auditing is analytical, not constructive.
iii. It is critical, investigative, concerned with the basis for accounting measurements and assertions.
iv. Auditing emphasizes proof, the support for financial statements and data.
What is the primary difference between internal and external financial reporting assurance services?
a. The difference between internal and external financial reporting assurance services is their audience.

b. External Auditors focus on the benefit of the third-party users.

c. Internal Auditors focus on the benefit of management and board of directors.
What are some of the factors that have fueled the dramatic increase in demand for internal audit services over the past 30 years?
a. Globalization

b. Increase complex corporate structure

c. e-commerce and other technological advances

d. Global economic downturn

e. New laws and regulations and professional guidance
What types of procedures might an internal auditor use to test the design adequacy and operating effectiveness of governance, risk management, and control processes?
a. Inquiring of managers and employees

b. Observing activities

c. Inspecting resources and documents

d. Reperforming control activities

e. Reperforming trend and ratio analysis

f. Performing data analysis using computer-assisted audit techniques

g. Gathering corroborating information from independent third parties.

h. Performing direct tests of events and transactions
What is co-sourcing? Why might an organization choose to co-source its internal audit function?
a. Co-sourcing means that an organization is supplementing its in-house internal audit function to some extent via the services of third-party vendors.

b. Some third-party vendor may have specialized internal audit knowledge and skills that the organization does have in-house and circumstances in which organization has insufficient in-house internal audit resources to fully complete its planned engagements.
How is The IIA's leadership organization structured?
a. The IIA headquarters' executive leadership team is headed by the president and CEO.

b. The 38-member Global Board of Directors oversees the affairs of The IIA.

c. The Board's Executive comprises:

i. The Chairman of the board
ii. The Senior Vice Chairman
iii. Five Vice Chairmen
iv. A Secretary
v. Two most recent former chairmen of the board
What are the two categories of guidance included in the IPPF?
a. The Mandatory Guidance

b. Recommended Guidance
What are the three parts of the CIA exam?
a. Internal Audit Basics

b. Internal Audit Practice

c. Internal Audit Knowledge Elements
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