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Internal auditing is a dynamic profession. Which of the following best describes the scope of internal auditing as it has
developed to date?
A. Internal auditing involves evaluating the effectiveness and efficiency with which resources are employed.
B. Internal auditing involves evaluating compliance with laws, regulations, and contracts.
C. Internal auditing has evolved to evaluating all risk management, control, and governance systems.
D. Internal auditing has evolved to verifying the existence of assets and reviewing the means of safeguarding assets.
A. Internal auditing involves much more than just evaluating the effectiveness and efficiency with which resources are
employed.
B. Internal auditing involves much more than just evaluating compliance with laws, regulations, and contracts.
C. The Institute of Internal Auditors (IIA), the U.S. professional organization of internal auditors, has defined
internal auditing as: "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."
D. Internal auditing involves much more than just verifying the existence of assets and reviewing the means of
safeguarding assets.
One of the purposes of the International Standards for the Professional Practice of Internal Auditing as stated in the
Introduction to the current version of the Standards is to
A. The professionalization of internal auditing is important, but it is not one of the purposes of the Standards.
B. Independence and objectivity are aspects of the internal audit activity, but not one of the purposes of the Standards.
D. According to the IIA, the Standards are intended to: (1) State basic principles for the practice of internal
auditing; (2) Provide a framework for performing and promoting value added internal audit activities; (3)
Establish the basis for evaluating internal auditing performance; and (4) Improve organizational processes
and operations.
D. Job qualification specifications that include added emphasis on background knowledge and skills.
A. The limitation of the external auditors scope has not contributed to the advancement of the internal auditing
profession.
B. The increased interest by graduate students and experienced auditors has added to the advancement of the
profession, but is not the primary reason for the advancement.
C. The increase complexity and sophistication of the business operations required management to rely more
on the internal audit activity. The internal audit activity adds value by evaluating and contributing to the
improvement of the risk management, control and governance processes.
D. The improved job qualifications were the direct result of the increased complexity and sophistication of the business
operations.
A. Management needs to ensure the reliability and integrity of financial and operational information.
C. This is the major reason for establishing the internal audit activity. The internal auditing activity "helps an
organization accomplish it objectives by bringing systematic, disciplined approach to evaluate and improve
the effectiveness of risk management, control, and governance processes."
A. The internal auditor can assist the external audit, but this is not the primary objective of internal auditing.
B. The external auditor will form an opinion on the accuracy and completeness of the quarterly financial statements,
not the internal auditor.
C. Internal auditing is an independent, objective assurance and consulting activity designed to add value and improve
an organization's operation. The internal auditing function would be evaluate and assess controls so errors and fraud
can be minimized.
D. If employees can more effectively perform their jobs then there is greater chance that the goals and
objectives of the company will be realized.