Question 1

An operational auditor may use "engineered standards" as an evaluation criteria.

Accepted Answer

A) True 
 B)False

Question 2

The "Red Book" specifies all auditing standards issued by the U.S.General Accounting Office.

Accepted Answer

A) True 
 B)False

Question 3

Operational audits are often categorized as functional,organizational,or special assignments.

Accepted Answer

A) True 
 B)False

Question 4

The two most important qualities for an operational auditor are:

Accepted Answer

A)  personality and appearance. 
B)  independence and competence. 
C)  competence and technical training. 
D)  academic background and sufficient experience. 
A)  personality and appearance. 
B)  independence and competence. 
C)  competence and technical training. 
D)  academic background and sufficient experience.

Question 5

The auditing standards of the Yellow Book are consistent with the ten generally accepted auditing standards of the AICPA.There are,however,important additions/modifications in the Yellow Book.For example,the Yellow Book recognizes that materiality and risk are lower due to the nature of the government enterprise.Discuss the other additions/modifications.

Accepted Answer

•Quality control.Auditors of government

Question 6

The International Standards for the Professional Practice of Auditing list 7 performance standards.List three.

Accepted Answer

Managing the Internal Audit Ac

Question 7

As compared to a financial audit,an operational audit:

Accepted Answer

A)    
B)    
C)    
D)    
A)    
B)    
C)    
D)

Question 8

Effectiveness is concerned with whether defined goals are achieved,whereas efficiency is concerned with whether the goals are achieved with a minimum use of resources.

Accepted Answer

A) True 
 B)False

Question 9

Integrity is one of the IIA's ethical principles.

Accepted Answer

A) True 
 B)False

Question 10

Effective internal controls are designed to help organizations achieve which of the following objectives?

Accepted Answer

A)  Reliability of financial reporting 
B)  Efficiency and effectiveness of operations 
C)  Compliance with applicable laws and regulations 
D)  All of the above 
A)  Reliability of financial reporting 
B)  Efficiency and effectiveness of operations 
C)  Compliance with applicable laws and regulations 
D)  All of the above

Question 11

Internal auditors are expected to provide value to the organization through improved operational effectiveness.

Accepted Answer

A) True 
 B)False

Question 12

How do the risk and materiality thresholds change in a government audit compared to a financial statement audit of a public company?

Accepted Answer

The Yellow Book recognizes that in gover

Question 13

External auditors typically consider internal auditors effective if they meet three criteria.What are these criteria?

Accepted Answer

External auditors typically consider int

Question 14

A typical objective of an operational audit is to determine whether an entity's:

Accepted Answer

A)  internal control is adequately operating as designed. 
B)  financial statements present fairly the results of operations. 
C)  specific operating units are functioning efficiently and effectively. 
D)  operational information is in accordance with generally accepted government auditing standards. 
A)  internal control is adequately operating as designed. 
B)  financial statements present fairly the results of operations. 
C)  specific operating units are functioning efficiently and effectively. 
D)  operational information is in accordance with generally accepted government auditing standards.

Question 15

Current professional auditing standards prohibit external auditors from using internal auditors for direct assistance on external audits.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following is not a purpose of a program audit as performed by government auditors?

Accepted Answer

A)  Determination of the extent to which the desired results established by the legislature are being achieved 
B)  Determination of the causes of inefficiencies in sponsored programs 
C)  Determination of the effectiveness of organizations, programs and activities 
D)  Determination as to whether the entity has complied with laws and regulations applicable to the program 
A)  Determination of the extent to which the desired results established by the legislature are being achieved 
B)  Determination of the causes of inefficiencies in sponsored programs 
C)  Determination of the effectiveness of organizations, programs and activities 
D)  Determination as to whether the entity has complied with laws and regulations applicable to the program

Question 17

Extensive professional development is necessary for auditors doing governmental audits.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following is not a similarity between external and internal auditors?

Accepted Answer

A)  Both must be independent of the company. 
B)  Both must be competent. 
C)  Both follow a similar methodology in performing their audits. 
D)  Both consider risk and materiality deciding the extent of their tests and evaluating results. 
A)  Both must be independent of the company. 
B)  Both must be competent. 
C)  Both follow a similar methodology in performing their audits. 
D)  Both consider risk and materiality deciding the extent of their tests and evaluating results.

Question 19

Which of the following is not one of the major differences between financial and operational auditing?

Accepted Answer

A)  The financial audit is oriented to the past, but an operational audit concerns performance for the future. 
B)  The financial audit report has widespread distribution, but the operational audit report has limited distribution. 
C)  Financial audits deal with the information on the financial statements, but operational audits are concerned with the information in the ledgers. 
D)  Financial audits are limited to matters that directly affect the fairness of the financial statement presentation, but operational audits cover any aspect of efficiency and effectiveness. 
A)  The financial audit is oriented to the past, but an operational audit concerns performance for the future. 
B)  The financial audit report has widespread distribution, but the operational audit report has limited distribution. 
C)  Financial audits deal with the information on the financial statements, but operational audits are concerned with the information in the ledgers. 
D)  Financial audits are limited to matters that directly affect the fairness of the financial statement presentation, but operational audits cover any aspect of efficiency and effectiveness.

Question 20

The two most important qualities for an operational auditor to possess are independence and competence.

Accepted Answer

A) True 
 B)False

Exam 26: Internal and Governmental Financial Auditing and Operational Auditing

An operational auditor may use "engineered standards" as an evaluation criteria.

The "Red Book" specifies all auditing standards issued by the U.S.General Accounting Office.

Operational audits are often categorized as functional,organizational,or special assignments.

The two most important qualities for an operational auditor are:

The International Standards for the Professional Practice of Auditing list 7 performance standards.List three.

As compared to a financial audit,an operational audit:

Effectiveness is concerned with whether defined goals are achieved,whereas efficiency is concerned with whether the goals are achieved with a minimum use of resources.

Integrity is one of the IIA's ethical principles.

Effective internal controls are designed to help organizations achieve which of the following objectives?

Internal auditors are expected to provide value to the organization through improved operational effectiveness.

How do the risk and materiality thresholds change in a government audit compared to a financial statement audit of a public company?

External auditors typically consider internal auditors effective if they meet three criteria.What are these criteria?

A typical objective of an operational audit is to determine whether an entity's:

Current professional auditing standards prohibit external auditors from using internal auditors for direct assistance on external audits.

Which of the following is not a purpose of a program audit as performed by government auditors?

Extensive professional development is necessary for auditors doing governmental audits.

Which of the following is not a similarity between external and internal auditors?

Which of the following is not one of the major differences between financial and operational auditing?

The two most important qualities for an operational auditor to possess are independence and competence.

The Assurance Services Market

The Audit Standards Setting Process

Audit Reports

Legal Liability Considerations for Auditors

Ethics and the Audit Profession

Audit Responsibilities and Objectives

Nature and Type of Audit Evidence

Audit Planning

Considering Materiality and Audit Risk

Considering Internal Control

Considering the Risk of Fraud

Implications of Information Technology for the Audit Process

Developing the Overall Audit Plan and Audit Program

Audit of the Sales and Collection Cycle: Tests of Controls and Substantive Tests of Transactions

Audit Sampling for Tests of Controls and Substantive Tests of Transactions

Completing the Tests in the Sales and Collection Cycle: Accounts Receivable

Audit Sampling for Tests of Details of Balances

Audit of the Acquisition and Payment Cycle: Tests of Controls, Substantive Tests of Transactions, and Accounts Payable

Completing the Tests in the Acquisition and Payment Cycle: Verification of Selected Accounts

Audit of the Inventory and Warehousing Cycle

Audit of the Payroll and Personnel Cycle

Audit of the Capital Acquisition and Repayment Cycle

Audit of Cash and Financial Instruments

Audit Completion

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