the code of ethics for internal auditors quizlet

One of the disadvantages of imposing this requirement would beAnswersA: The policy might negatively affect the departments ability to perform quality examinations of the companys financial and accounting systems.B: The policy would not promote the professionalism of the department.C: The policy would prevent the department from using outside consultants when the department did not have the skills and knowledge required in certain audit situations.D: The policy could limit the range of activities that could be audited by the department due to the departments narrow expertise and backgrounds. The exercise of due professional care includes consideration of materiality.Answer (b) is incorrect. Therefore, the manager adopted a very aggressive program to promote the internal auditing department within the organization. The final report must be written.Answer (d) is incorrect. A charter which set minimum professional standards, that is, CIA or CA, for its departments auditors would promote professionalism.Answer (c) is incorrect. Question: V1C1-0177Management asserted that the performance standards the auditors used to evaluate operating performance were inappropriate. Question: V1C1-0082According to the IIA Standards, the independence of internal auditors is achieved throughAnswersA: Staffing and supervision.B: Continuing education and due professional care.C: Human relations and communications.D: Organizational status and objectivity. Approval of audit committee or management is required by the Standards.Answer (c) is incorrect. Question: V1C1-0125During an audit of the organizations accounts payable function, an internal auditor plans to confirm balances with suppliers. There is not enough information to evaluate the effectiveness of follow-up.Answer (b) is incorrect. Answer ExplanationsAnswer (a) is incorrect. It is a classic part of most conflict-of-interest policies.Answer (d) is incorrect. Because of the corrective action, the internal auditor did not inform management. Internal auditors must possess the ability to communicate effectively; interpersonal skills are an essential element of that ability.Answer (d) is the correct answer. The principal means of preventing fraud is internal control; the internal auditors role is related to evaluating the control.Answer (d) is incorrect. 1.3. Evaluating the code for appropriate provisions, compliance therewith, and reporting the results would provide the audit committee with the greatest level of comfort.Answer (b) is incorrect. Cost savings and recommendations were highlighted in the report.AnswersA: I and II.B: I and III.C: I only.D: II and III. Prior approval by the IIA is not necessary for CPD courses. B: No. This participation includes those activities or relationships that may be in conflict with the interests of the organization. Ethics Code | PCAOB Reviewing and documenting systems are necessary parts of auditing a system under development. . Rules of Conduct. Auditors are not required to fill out internal control questionnaires on every audit. International Professional Practices Framework (IPPF), Certification in Risk Management Assurance, Root Cause Analysis for Enhancing Internal Audit Effectiveness, Communication Skills for Auditors: Interviewing and Negotiating. Only an appreciation is required.Answer (d) is incorrect. Auditors cannot omit necessary procedures because of a time constraint.Answer (c) is incorrect. The information was disclosed as part of the normal process of cooperation between the internal and external auditor. Answer (B) is correct. The action does violate the Code of Ethics.Answer (b) is incorrect. Answer ExplanationsAnswer (a) is the correct answer. It is the same as Answer (a).Answer (d) is the correct answer. Solid line toAnswersA: Board of directors, dotted line to vice president of finance.B: President, dotted line to board of directors.C: Controller, dotted line to board of directors.D: Vice president, finance, dotted line to board of directors. Within the definition of due professional care, the Standards include the evaluation of operating standards for acceptability and determining whether they are being met.Answer (c) is incorrect. This would be at the discretion of his employer.Answer (b) is incorrect. Question: V1C1-0103As used in the IIA Standards when discussing audit planning or risk assessment, the term risk is best defined as the probability thatAnswersA: An internal auditor will fail to detect a material error or event that causes financial statement or internal reports to be misstated or misleading.B: An event or action may adversely affect the organization.C: Management will, either knowing or unknowingly, make decisions that increase the potential liability of the organization.D: Financial statements and/or internal records will contain material error. A violation would occur only if confidential information were used for personal gain. Question: V1C1-0217An internal auditor has been assigned to audit a foreign subsidiary. Outside distribution is probably not appropriate.Answer (c) is the correct answer. All three responses would be appropriate according to the IIA Standards.This answer is incorrect. Question: V1C1-0016Developing an audit finding involves comparing the condition to the relevant standard or criterion. The integrity of internal auditors establishes trust and thus provides the basis for reliance on their judgement. "Internal auditors" refers to Institute members, recipients of or candidates for IIA professional certifications, and those who provide internal auditing services within the definition of internal auditing. If the incidence of significant fraud has been established with reasonable certainty, the auditor is responsible for reporting such to senior management or the board.Answer (b) is incorrect. This item is part of a JSTOR Collection. This characteristic is mentioned in the Code.Answer (c) is the correct answer. However, the opinion is a desirable component of the audit report.Answer (d) is incorrect. Which of the following standards for reporting has been disregarded in the above case?AnswersA: The follow-up actions were not adequate.B: The auditors should have implemented appropriate corrective action as soon as the duplicate credits were discovered.C: Auditor recommendations should not be included in the report.D: The report was not timely. Refer to the correct answer explanation.This answer is incorrect. The charter defines the purpose, authority, and responsibility of the internal auditing department.Answer (b) is incorrect. The internal auditor agreed to perform this work for a reduced fee during nonwork hours.B: During the audit of the companys construction of a building addition to the corporate office, the vicepresident of facilities management gave the auditor a commemorative mug with the companys logo. Auditor 1 has a part-time job outside of office hours as a visiting professor at a local community college.2. In this circumstance you shouldAnswersA: Accept the audit engagement and begin work immediately.B: Discuss the need for such an audit with your former superior, the treasurer.C: Suggest that the audit be performed by another member of the internal auditing staff.D: Offer to prepare an audit program but suggest that interviews with your former coworkers be conducted by other members of the internal auditing staff. Auditor in charge would not be correct unless designated by director of internal audit.Answer (c) is the correct answer. It also includes training, employee performance evaluations, time and expense control, and similar administrative areas. To the contrary, the Standards suggest keeping the plan flexible in the event of unanticipated needs.Answer (d) is incorrect. The audit director is the ultimate authority for the internal auditing department, but direct supervision by this individual will be lacking in a large department. Question: V1C1-0085Which of the following relationships best depicts the appropriate dual reporting responsibility of the internal auditor?Administratively to theAnswersA: Board of directors, functionally to the chief executive officer.B: Controller, functionally to the chief financial officer.C: Chief executive officer, functionally to the board of directors.D: Chief executive officer, functionally to the external auditor. If it does, however, it is the highest organizational level to receive it. Retain the rationale of both parties in the working papers.B: Note the disagreement and retain the notice of disagreement and follow-up work in the audit working papers.C: Present both conclusions to the director of internal auditing for resolution. This is what the IIA Standards require.Answer (c) is incorrect. However, she feels she is performing the same quality work she always has.D: John discovered an internal financial fraud during the year. Question: V1C1-0140If an internal auditor finds that no corrective action has been taken on a prior audit finding that is still valid, the IIA Standards states that the internal auditor shouldAnswersA: Restate the prior finding along with the findings of the current audit.B: Determine whether management or the board has assumed the risk of not taking corrective action.C: Seek the boards approval to initiate corrective action.D: Schedule a future audit of the specific area involved. The action does violate the Code of Ethics.Answer (c) is incorrect. Question: V1C1-0114Audit policy requires that final reports will not be issued without a management response. b. evaluation and reporting on the effectiveness of internal control over financial reporting by external auditors only for large public Shall not knowingly be a party to any illegal activity, or engage in acts that are discreditable to the profession of internal auditing or to the organization. This helps prevent the possibility of kickbacks, while preserving good auditor/auditee relations.C: Formally recommend that the organization establish a corporate code of ethics. Article II prohibits members and CIAs from being party to illegal activities. This is the correct answer per the IIA Standards.Answer (b) is incorrect. This evidence suggests that the auditor did not confirm this information or follow up with testing.Answer (b) is incorrect. Question: V1C1-0150The IIA Standards define competent information asAnswersA: Supporting the audit findings and being consistent with the audit objectives.B: Assisting the organization in meeting prescribed goals.C: Factual, adequate, and convincing so that a prudent person would reach the same conclusion as auditor.D: Reliable and the best available through the use of appropriate audit techniques. This is a recommended responsibility of audit committees.Answer (b) is incorrect. As long as the auditor did not assume any operating responsibilities, for example, documenting operating procedures, the auditors objectivity would not be compromised.Answer (d) is incorrect. Answer ExplanationsAnswer (a) is incorrect. Although desirable, the Certified Internal Auditor designation is not mandatory for a person to become an internal auditor. An understanding of management principles is required of all internal auditors.Answer (d) is incorrect. 3,000 new books annually, covering a wide range of subjects including biomedicine and the life sciences, clinical medicine, Identify the associations primary purpose for establishing the code of ethics.AnswersA: To outline criteria for professional behavior to maintain standards of competence, morality, honesty, and dignity within the association.B: To establish standards to follow for effective accounting practice.C: To provide a framework within which accounting policies could be effectively developed and executed.D: To outline criteria that can be utilized in conducting interviews of potential new accountants. In this type of system, airline tickets would normally be charged to employee accounts receivable; departmental charges would be initiated by the expense report transaction.Answer (d) is incorrect. It is a classic part of most conflict-of-interest policies.Answer (b) is the correct answer. If the auditor encounters such a dilemma, the auditor should alwaysAnswersA: Seek counsel from an independent attorney to determine the personal consequences of potential actions.B: Consider all parties affected and the potential consequences of actions, and take an action consistent with the objectives of internal auditing and the concepts embodied in the Institute of Internal Auditors Code of Ethics.C: Seek the counsel of the audit committee before deciding on an action.D: Act consistently with the code of ethics adopted by the organization even if such action would not be consistent with the IIAs Code of Ethics. Therefore, there is no violation of the Code of Ethics.Answer (b) is incorrect. The Standards state that an auditor may review contracts prior to their execution. Judgment may be applied to their use, but not to whether to use them. It would not be practicable to seek management advice for all potential dilemmas. External audits reliance on the work of internal auditing is the subject of an AICPA pronouncement.Answer (c) is incorrect. These executives may not be knowledgeable enough about details.Answer (c) is incorrect. Auditors must exhibit loyalty to the organization, but not be a party to any illegal activity. A charter establishes the departments independence from management. The scope of the internal audit function does not include an assessment of the companys strategic management process.Answer (c) is incorrect. Ethical Scenarios for Internal Auditors - The Institute of Internal However, the auditor should be aware of potential conflicts.Answer (b) is incorrect. Thus, auditors must comply with legal subpoenas.Answer (b) is incorrect. Question: V1C1-0145According to the IIA Standards, internal auditors should review the means of physically safeguarding assets from losses arising fromAnswersA: Misapplication of accounting principles.B: Procedures that are not cost justified.C: Exposure to the elements.D: Underutilization of physical facilities. 1.2 Shall observe the law and make disclosures expected by the law and the profession. The standard of due professional care would be violated if the auditorAnswersA: Identified potential ways in which an error could occur and ranked the items for audit investigation.B: Informed the audit manager of the suspicions and asked for advice on how to proceed.C: Did not test for possible misstatement because the audit program had already been approved by audit management.D: Expanded the audit program, without the auditees approval, to address the highest-ranked ways in which a misstatement may have occurred. Reporting findings outside the organization violates Article II of the Code of Ethics.Answer (b) is incorrect. C. Serve as the investigative arm of the board. Detail policies are necessary for effective communication, coordination, and consistency of operation of larger audit staffs. Which of the following statements should be included in the policy to illustrate unacceptable behavior?AnswersA: Serving as a member of the board of directors of nonprofit organization dedicated to preservation of the environment.B: Serving as an elected official (part-time) of a local government.C: Providing a mailing list of company employees to a relative who is offering training that might benefit the organization.D: Teaching (part-time) at a local university. This would normally be one level above the auditee. Training and the enhanced effectiveness of the internal auditing department are important considerations.Answer (d) is the correct answer. Based on the IIAs Code of Ethics, identify the directors most appropriate course of actionAnswersA: Say nothing; guard against interfering with the independence of the external auditors.B: Discuss the issue with management and take appropriate action to ensure that the external auditors are informed.C: Inform the external auditors of the possibility of a shortage but allow them to make an independent assessment of the amount.D: Report the shortages to the board of directors and allow the board to report it to the external auditor. No reporting is required when suspicious acts are reported to the auditor.Answer (c) is incorrect. Answer ExplanationsAnswer (a) is incorrect. Auditors sometimes must rely on outside experts; the Standards allow this reliance. Flash Cards V1C1 - V1C1 Flashcards by Rebecca Walck The Standards allow use of experts when needed. Answer ExplanationsAnswer (a) is incorrect. Question: V1C1-0004A charter is being drafted for a newly formed internal auditing department. It is not appropriate to conduct an audit for compliance with criteria that have never been communicated to auditees.Answer (b) is the correct answer. Question: V1C1-0134The audit committee can serve several important purposes, some of which directly benefit internal auditing. The audit report proposed a relatively large adjustment due to an error in the local inventory system. Question: V1C1-0112A professional engineer applied for a position in the internal auditing department of a high-technology firm. Question: V1C1-0161An audit committee of the board of directors of a corporation is being established. Internal 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. Request Permissions. Question: V1C1-0198Which of the following actions by an internal auditor would violate the IIAs Code of Ethics?AnswersA: Attendance at an educational program offered by an auditee to all employees.B: Acceptance of airline tickets from an auditee.C: Disclosure, in an audit opinion, of all material facts relevant to the audit area.D: Disposal of stock in the company prior to learning of a business downturn. Staffing engagements is not a supervisory function; it is a planning function.Answer (c) is incorrect. Question: V1C1-0057The primary criteria for determining the adequacy of working papers can be found in theAnswersA: IIA Standards.B: Institutes Code of Ethics.C: Statement of Responsibilities of Internal Auditing.D: Foreign Corrupt Practices Act. Per the Code of Ethics, Article VI, Certified Internal Auditors shall reveal such material facts known to them which, if not revealed, could either distort the report of the results of operations under review or conceal unlawful practice.Answer (b) is incorrect. Internal auditors will be concerned with fraud and waste. The supervisor was the auditors friend and neighbor who had a hospitalized child requiring him to miss work off and on for several weeks.How many of the allegations about Auditor 2 represent violations of the IIAs Code of Ethics?AnswersA: One.B: Two.C: Three.D: Four. Which of the following would most likely be considered inappropriate regarding the scope and/or recommendations of the audit?AnswersA: A review of the corporate code of ethics and a comparison to other corporate codes.B: A survey of corporate employees, asking general questions regarding the ethical quality of corporate decision making.C: Administration of an anonymous ethics test to determine if employees know of unethical behavior or have acted unethically themselves.D: A survey of the board of directors to determine members level of support for a corporate code of ethics.
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