Question 1

The third category of guidance ___________ includes a variety of materials that are developed and/or endorsed by the IIA. This category includes research studies, books, seminars, conferences, and other products and services related to the professional practice of internal auditing that do not meet the criteria for inclusion in mandatory guidance or Practice Advisories:

Accepted Answer

A)  Products & services security Advisories 
B)  Practice Advisories 
C)  Security Advisories 
D)  Development and Practice Aids

Question 2

A code of ethics is necessary and appropriate for the profession of internal auditing, founded as it is on the trust placed in its objective assurance about risk management, control, and governance. The IIA's Code of Ethics extends beyond the definition of internal auditing to include the following essential Components please chooses the correct option:

Accepted Answer

A)  Rules of Conduct that describe behavior norms expected of internal auditors 
B)  Principles that is relevant to the profession and practice of internal auditing 
C)  All of the above 
D)  None of the above

Question 3

The control environment sets the tone of an organization and influences the control consciousness of its employees. The characteristics of an effective control environment are all of the following EXCEPT:

Accepted Answer

A)  Management communicates the importance of internal controls to all employees. 
B)  A system is in place to monitor controls on a regular basis. 
C)  Employees are held accountable for their performance. 
D)  Employees don not have clearly defined responsibilities.

Question 4

_______is the risk that can be controlled by various preventative measures such as adding personnel to a function, installing burglar alarms, increasing the frequency and level of management review, or implementing tighter standards. Where as _______ is the Risk that can be transferred by purchasing insurance policies to cover losses of several types such as cash, property, or facilities.

Accepted Answer

A)  Control the risk, Transfer the risk 
B)  Accept the risk, Transfer the risk 
C)  Transfer the risk, Control the risk 
D)  Control the risk, Accept the risk

Question 5

Statistical sampling allows the auditor to limit sampling risk to an acceptable level. Following are major classifications of sample selection are all of the following EXCEPT:

Accepted Answer

A)  Judgment samples 
B)  Probability samples 
C)  Random sample 
D)  Both A & B

Question 6

All of the following are the examples Purchasing/Inventory Red Flags EXCEPT:

Accepted Answer

A)  Increase in purchasing inventory but no increase in productivity. 
B)  Customer complaints that they are not receiving notices for nonpayment on account. 
C)  Payments to vendors who are not on approved vendor list. 
D)  Vendors without physical addresses.

Question 7

All of the following are the Specific aspects of proper audit supervision EXCEPT:

Accepted Answer

A)  Ensuring that staff auditors are qualified to perform their assignments and verifying that audit working papers adequately support audit findings, conclusions and recommendations. 
B)  Implemented adequate audit policies and procedures. 
C)  Approving the audit program and ensuring that it is followed, unless approved changes are made. 
D)  Providing clear and timely instructions to staff so audit objectives are achieved.

Question 8

Although a government can have as many funds as it wishes, all of the funds must be classified into one of the following fund types EXCEPT.

Accepted Answer

A)  Proprietary Funds 
B)  Property funds 
C)  General funds 
D)  Governmental Funds

Question 9

______is the middle position in an array of values. The median value can be misleading in small data sets, so it is usually used to characterize a large number of values. Where as the ______ is the most commonly occurring value in an array. The mode is a less frequently used measure of average because a mode may not exist in some sets of data, or there may be more than one mode in the data set.

Accepted Answer

A)  Arithmetic mean, standard deviation 
B)  Mean, median 
C)  Standard deviation, arithmetic mean 
D)  Median, mode

Question 10

An integrated budget provides the mechanism to review spending activities and make judgments on the appropriateness of those expenditures. Where as Capital budgeting is often based on the issuance of capital debt.

Accepted Answer

A)  Zero-based budgeting, program budgeting 
B)  Program budgeting, zero-based budgeting 
C)  Zero-based Budget, integrated Budget 
D)  Integrated budget, capital budgeting

Question 11

The mission of the _________is to establish and improve standards of state and local governmental accounting and financial reporting that will result in useful information for users of financial reports, and guide and educate the public, including issuers, auditors, and users of those financial reports. ___________establishes new requirements for the annual financial reporting for state and local government.

Accepted Answer

A)  Generally Accepted Accounting Principles (GAAP), GASB's Statement No. 34 
B)  GASB's Statement No. 34, Generally Accepted Accounting Principles (GAAP), 
C)  UNIFORM BUDGETING AND ACCOUNTING ACT Act 2 of 1968, GASB's Statement No. 34 
D)  Governmental Accounting Standards Board (GAS
B) , GASB's Statement No. 34

Question 12

A survey is a process for gathering information, without detailed verification, on the activity being examined. A survey may involve use of all of the following procedures EXCEPT:

Accepted Answer

A)  Interviews with individuals affected by the activity, e.g., users of the activity are output. 
B)  Review of management reports and studies. 
C)  Document key control activities and Discussions with the customer. 
D)  Study organizational structures.

Question 13

Internal controls consist of all of the following interrelated components please choose the correct option:

Accepted Answer

A)  Control Environment and Risk Assessment 
B)  Control Activities and Information and Communication 
C)  Monitoring 
D)  All of the above

Question 14

The characteristics of ____________ will vary based on the _____ of the audit unit and the nature of its work. Where as the frequency of required quality assurance reviews varies based on the _____ of standards followed.

Accepted Answer

A)  Internal quality control systems, length, type 
B)  External quality control systems, size, type 
C)  External quality control systems, quality, type 
D)  Internal quality control systems, size, type

Question 15

In testing the controls established by management, auditors should be able to identify if there are high-risk areas for integrity violations. Auditor responsibilities for detecting integrity violations include all of the following EXCEPT:

Accepted Answer

A)  Auditors should evaluate the evidence and determine the appropriate course of action. An investigation may be warranted if indicators strongly suggest that integrity violations occurred. 
B)  When significant control weaknesses are found, the auditor should conduct sufficient tests to determine if these weaknesses resulted in integrity violations. The level of testing should increase as the number or significance of control weaknesses increases. 
C)  Auditors must not have the knowledge and skills to adequately identify when violations occurred. 
D)  Auditors should notify the proper legal authorities, if warranted.

Question 16

The statistical section contains provides trend data and other nonfinancial information to assist in assessing a government's financial condition. All of the following are the components of this section EXCEPT:

Accepted Answer

A)  General governmental expenditures and revenues for the past 10 years. 
B)  Special assessments and collections for the past 10 years. 
C)  Property tax levies and assessed value information for the past100 years. 
D)  Revenue bond coverage for the past 10 years.

Question 17

Which of the following are the two broad classifications of management styles please mark the correct option:

Accepted Answer

A)  Directing management 
B)  Autocratic management 
C)  Consultative management 
D)  All of the above

Question 18

Standards must be reviewed and applied appropriately during the conduct of an audit. Following are some illustrations of situations that may arise during the course of an audit EXCEPT:

Accepted Answer

A)  Qualification 
B)  Independence 
C)  Communication 
D)  Coordination

Question 19

The __________ expand upon the Attribute and Performance Standards, providing guidance applicable in specific types of engagements. These standards ultimately may deal with industry specific, regional, or specialty types of audit services:

Accepted Answer

A)  Control Standards 
B)  Communication Standards 
C)  Implementation Standards 
D)  Quality Standards

Question 20

________ is usually applied to testing systems of internal control and is concerned with estimating the number of errors in the population. This sampling calls for an answer on a two way scale (e.g., Yes or No, Right or Wrong). Where as _______ can be used for values such as dollar values, time periods, or weights. Estimates are based on a sample of items such as the value of inventories, the value of disallowances of travel vouchers, or the value of accounts receivable.

Accepted Answer

A)  Judgment samples, Probability samples 
B)  Attributes sampling, Variables sampling 
C)  Variables sampling, Attributes sampling 
D)  Probability samples, Judgment samples

Exam 2: Certified Government Auditing Professional