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1. All shipments to customers are recorded as receivables2. All billed sales are for goods shipped to customers (q5 from page 21 of ch11 MC list)3. All recorded receivables represent goods shipped to customers4. All shipments to customers are billedX. An internal auditor is testing cash disbursement transactions. Internal control policies require every check request to beaccompanied by an approval voucher (that is, a package of documents evidencing that a good or service has been receivedand invoiced by the vendor). The voucher approval is based on a 3-way matching of purchase order, receiving report, andvendor’s invoice. To determine whether checks have proper support, the internal auditor should begin her testing procedures by selecting items from the population of:1. Check copies (q6 from page 21 of ch11 MC list)2. Purchase orders3. Receiving reports4. Approved vouchersY. The achieved upper deviation limit is 7% and the risk of assessing control risk too low is 5%. How should the internal auditor interpret this attribute sampling outcome?1. There is a 7% chance that the deviation rate in the population is less than or equal to 5%2. There is a 5% chance that the deviation rate in the population is less than 7%3. There is a 5% chance that the deviation rate in the population exceeds 7% (q7 from page 21 of ch11 MC list)4. There is a 9.5% chance that the deviation rate in the population equals 7% Part B – Short Answer/Case Problems:B1 for 6 marks/ According to COSO, what are the 4 categories of business objectives? Briefly outline the components of the IIA Code of Ethics. How does the code of ethics help in achieving those objectives while reducing the expectation gap?COSO – strategy, operations, compliance, financial reportingInternal auditors are expected to apply and uphold the following principles: Integrity The integrity of internal auditors establishes trust and thus provides the basis for reliance on their judgment. Objectivity4
Internal auditors exhibit the highest level of professional objectivity in gathering, evaluating, and communicating information about the activity or process being examined. Internal auditors make a balanced assessment of all the relevant circumstances and are not unduly influenced by their own interests or by others in forming judgments. ConfidentialityInternal auditors respect the value and ownership of information they receive and do not disclose information without appropriate authority unless there is a legal or professional obligation to do so. CompetencyInternal auditors apply the knowledge, skills, and experience needed in the performance of internal auditing services. 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 bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes.The Code of Ethicstogether with The Institute’s Professional Practices Frameworkand other relevant Institute pronouncements provide guidance to internal auditors serving others. "Internal auditors" refers to Institute members, recipients of or candidates for IIA professional certifications, and those who provide internal auditing services within the definition and expectations of internal auditing.