MODD - Module D - Internal, Governmental, and Fraud Audits...

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Module D - Internal, Governmental, and Fraud Audits Module D Internal, Governmental, and Fraud Audits Multiple Choice Questions 1. The definition of internal audit includes all of the following except A. Independent and objective B. Assurance and consulting activity C. Determine efficient and effective performance D. Add value and improve an organization's operations Difficulty: Easy Source: Original 2. Of the following: I. More expertise II. Improved control over audit costs III. Improved alignment with company goals The reasons for outsourcing an internal audit include A. I Only B. C. D. Difficulty: Medium Source: Original MODD-1
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Module D - Internal, Governmental, and Fraud Audits 3. The primary difference between operational auditing and financial auditing is that in operational auditing A. The auditor is only concerned with the audited activity's adherence to company policy and procedures B. The auditor is seeking to help management use resources in the most effective manner possible C. The auditor starts with the financial statements of an activity being audited and works backward to the basic processes involved in producing them D. The auditor can use analytical skills and tools that are not necessary in financial auditing Difficulty: Easy Source: Original MODD-2
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Module D - Internal, Governmental, and Fraud Audits 4. Independence permits internal auditors to render impartial and unbiased judgments. The best way for internal audit departments to achieve independence is through A. Individual knowledge and skills B. Organizational knowledge and skills C. Supervision within the organization D. Organizational status and individual objectivity Difficulty: Easy Source: Original 5. The proper organizational role of internal auditing is to A. Assist external auditors in order to reduce external audit fees B. Perform studies to assist in the attainment of more efficient operations C. Serve as an investigative arm of senior management and the board of directors D. Serve as an independent, objective assurance and consulting activity that adds value to the organization Difficulty: Medium Source: Original 6. During an audit of the quality control area, an auditor has identified that a specific product has a 3% failure rate when tested. The specification calls for a failure rate of less than 1.8%. Product failure might lead to customer injury and in turn lawsuits against the company. The auditor has communicated this to management. Which of the following is NOT an acceptable response from management with regard to this risk? A. Management is aware of the risk and has decided the risk is acceptable B. Management has decided not to continue the manufacture of this product C. Management has decided to increase the quality control activity to reduce the manufacture of unacceptable product to an acceptably low level D. Management has decided that the test data is unreliable and has decided not to respond to the audit findings Difficulty: Medium Source: Original MODD-3
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This note was uploaded on 05/26/2011 for the course ACCT 403 taught by Professor Mark during the Spring '10 term at Strayer.

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MODD - Module D - Internal, Governmental, and Fraud Audits...

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