ACC 550 EXAM 3 QUESTIONS AND VERIFIED
ANSWERS
Although all the current members of an internal audit activity have good records of
performance, the manager is not sure if any of the members are ready to assume a
management role. Which of the following is an advantage of bringing in an outsider
rather than promoting from within?
A. Management training costs are reduced when a qualified outsider is hired
B. The manager can be sure that the new position will be filled by a competent
employee
C. Bringing in an outsider is a less expensive alternative than promoting from within
D. The "modeling" effect is strengthened by bringing in a new role model - answers - a
Which of the following would not be an appropriate staffing issue?
A. Providing a competitive selection of employee benefits
B. Providing continuing educational opportunities for each internal auditor
C. Selecting qualified and competent individuals
D. Appraising each internal auditor's performance at least annually - answers - a
What is the primary advantage of parallel simulation? - answers - any transactions
during the period may be reprocessed
A typical function of an audit committee is: - answers - not:approving the external
auditor's work plan
Maybe: meeting annually with the chief audit executive
Which of the following is not a characteristic of effective risk management?
A. It provides absolute assurance that organizational objectives will be achieved
B. It is fully integrated into management at all levels
C. It assists in identifying key controls
D. It reduces unacceptable risks to tolerable levels - answers - c
An organization has outsourced its internal audit activity to an external service provider.
Consequently, - answers - the provider must remind the organization of its ultimate
responsibility
By comparing job descriptions with the qualifications and duties of the individuals
currently holding these jobs, a manager can: - answers - determine whether the
organization is appropriately staffed
Which of the following statements regarding the external auditor is true?
A. The external auditor's work is overseen and reviewed by the audit committee
, B. Review of the external auditor's control and audit reports during each engagement is
done by a different accounting firm
C. Negotiation of the external auditor's fee is the responsibility of the corporate officers
D. Disputes between the external auditor and management are resolved through an
arbitrator - answers - a
Which of the following is necessary to audit balances in an online computer system in
an environment of destructive updating?
A. Periodic dumping of transaction files
B. An integrated test facility
C. A well documented audit trail
D. Year end use of audit hooks - answers - c
Coordination of internal and external auditing can reduce the overall costs. Who is
responsible for actual coordination of internal and external auditing efforts? - answers -
the chief audit executive
When a risk assessment process has been used to construct an audit engagement
schedule, which of the following should receive attention first?
A. Management has requested an investigation of possible lapping in receivables
B. The external auditors have requested assistance for their upcoming annual audit
C. A new accounts payable system is currently undergoing testing by the information
technology department
D. The existing accounts payable system has not been audited over the past year -
answers - a
Which of the following items is least likely to be considered when determining the
strategy for assessing governance, risk management, and control?
A. The members of the audit committee
B. The organizational structure
C. The seniority of the persons responsible
D. The maturity of the processes - answers - a
A chief audit executive most likely uses risk assessment for audit planning because it
provides: - answers - a systematic process for assessing and integrating professional
judgment about probably adverse conditions
The use of external service providers with expertise in healthcare benefits is appropriate
when the internal audit activity is:
A. Evaluating the organization's estimate of its liability for postretirement benefits, which
include healthcare benefits
B. Training its staff to conduct an audit of healthcare costs in a major division of the
organization
C. Comparing the cost of the organization's healthcare program with other programs
offered in the industry
D. All of the answers are correct - answers - d
ANSWERS
Although all the current members of an internal audit activity have good records of
performance, the manager is not sure if any of the members are ready to assume a
management role. Which of the following is an advantage of bringing in an outsider
rather than promoting from within?
A. Management training costs are reduced when a qualified outsider is hired
B. The manager can be sure that the new position will be filled by a competent
employee
C. Bringing in an outsider is a less expensive alternative than promoting from within
D. The "modeling" effect is strengthened by bringing in a new role model - answers - a
Which of the following would not be an appropriate staffing issue?
A. Providing a competitive selection of employee benefits
B. Providing continuing educational opportunities for each internal auditor
C. Selecting qualified and competent individuals
D. Appraising each internal auditor's performance at least annually - answers - a
What is the primary advantage of parallel simulation? - answers - any transactions
during the period may be reprocessed
A typical function of an audit committee is: - answers - not:approving the external
auditor's work plan
Maybe: meeting annually with the chief audit executive
Which of the following is not a characteristic of effective risk management?
A. It provides absolute assurance that organizational objectives will be achieved
B. It is fully integrated into management at all levels
C. It assists in identifying key controls
D. It reduces unacceptable risks to tolerable levels - answers - c
An organization has outsourced its internal audit activity to an external service provider.
Consequently, - answers - the provider must remind the organization of its ultimate
responsibility
By comparing job descriptions with the qualifications and duties of the individuals
currently holding these jobs, a manager can: - answers - determine whether the
organization is appropriately staffed
Which of the following statements regarding the external auditor is true?
A. The external auditor's work is overseen and reviewed by the audit committee
, B. Review of the external auditor's control and audit reports during each engagement is
done by a different accounting firm
C. Negotiation of the external auditor's fee is the responsibility of the corporate officers
D. Disputes between the external auditor and management are resolved through an
arbitrator - answers - a
Which of the following is necessary to audit balances in an online computer system in
an environment of destructive updating?
A. Periodic dumping of transaction files
B. An integrated test facility
C. A well documented audit trail
D. Year end use of audit hooks - answers - c
Coordination of internal and external auditing can reduce the overall costs. Who is
responsible for actual coordination of internal and external auditing efforts? - answers -
the chief audit executive
When a risk assessment process has been used to construct an audit engagement
schedule, which of the following should receive attention first?
A. Management has requested an investigation of possible lapping in receivables
B. The external auditors have requested assistance for their upcoming annual audit
C. A new accounts payable system is currently undergoing testing by the information
technology department
D. The existing accounts payable system has not been audited over the past year -
answers - a
Which of the following items is least likely to be considered when determining the
strategy for assessing governance, risk management, and control?
A. The members of the audit committee
B. The organizational structure
C. The seniority of the persons responsible
D. The maturity of the processes - answers - a
A chief audit executive most likely uses risk assessment for audit planning because it
provides: - answers - a systematic process for assessing and integrating professional
judgment about probably adverse conditions
The use of external service providers with expertise in healthcare benefits is appropriate
when the internal audit activity is:
A. Evaluating the organization's estimate of its liability for postretirement benefits, which
include healthcare benefits
B. Training its staff to conduct an audit of healthcare costs in a major division of the
organization
C. Comparing the cost of the organization's healthcare program with other programs
offered in the industry
D. All of the answers are correct - answers - d
