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Internal Auditing Chapter 5

Terms in this set (11)

In assessing organization risk in a manufacturing organization, which of the following would have the greatest long-range impact on the organization?
a. advertising budget
b. production scheduling
c. inventory policy
d. product quality
d. product quality
Internal auditors often prepare process maps and reference portions of these maps to narrative descriptions of certain activities. This an an appropriate procedure to:
a. Determine the ability of the activities to produce reliable information.
b. Obtain the understanding necessary to test the process.
c. Document that the process meets internal audit standards.
d. Determine whether the process meets established management objectives.
b. Obtain the understanding necessary to test the process.
If a risk appears in the bottom right of quadrant II in the above risk control map, it means that:
a. There is an appropriate balance between risk and control
b. the controls may be excessive relative to the risk
c. the controls may be inadequate relative to the risk
d. there is not enough information to make a judgment
b. the controls may be excessive relative to the risk
If a risk appears in the middle of quadrant IV in the above risk control map, it means that:
a. There is an appropriate balance between risk and control
b. the controls may be excessive relative to the risk
c. the controls may be inadequate relative to the risk
d. there is not enough information to make a judgment
a. There is an appropriate balance between risk and control
Which of the follwing circumstances would concern the internal auditor the most?
a. A risk in the lower left corner of quadrant I
b. A risk in the lower right corner of quadrant II
c. A risk in the upper left corner of quadrant III
d. A risk in the upper right corner of quadrant IV
c. A risk in the upper left corner of quadrant III
Which of the following are business processes?
I. strategic planning
II. review and write off of delinquent loans.
III. safeguarding of assets
IV. remittance of payroll taxes to the respective tax authorities
a. I and III
b. II and IV.
c. I, II and IV
d. I, II, III and IV
b. II and IV.
Which of the following symbols in a process map will most likely contain a question?
a. rectangle
b. diamond
c. arrow
d. oval
b. Oval
After business risks have been identified, they should be assessed in terms of their inherent:
a. impact and likelihood
b. likelihood and probability
c. significance and severity
d. significance and control effectiveness
a. impact and likelihood
in a risk by process matrix, a provess that helps to manage a risk indirectly would be shown to have:
a. a key link
b. a secondary link
c. an indirect link
d. no link at all
b. a secondary link
a major upgrade to an important information system would most likely represent a high:
a. external risk factor
b. internal risk factor
c. other risk factor
d. likelihood of future systems problems
b. internal risk factor
Which of the following is true regarding business process outsourcing?
a. outsourcing a core, high-risk business process business process reduces the overall operational risk.
b. outsourced processes should not be included in the internal audit universe.
c. the independent outside auditor is required to review all significant outsourced business processes.
d. management's controls to ensure the outsourcing provide meets contractual performance requirements should be tested by the internal audit function
d. management's controls to ensure the outsourcing provide meets contractual performance requirements should be tested by the internal audit function
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