Tag: Accounting

The scope and objectives of the internal audit function vary widely and depend on the size and structure of the entity and the requirements of its management.

Which ONE of the following functions should the internal audit NOT perform, and thus still operate effectively?

Select ONE answer:

1. Examination of financial and operational information for management
2. Review of accounting systems and related controls
3. Routinely preparing bank reconciliations 
4. Advising management on cost-effective controls for systems and activities

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 3

1. Not correct
2. Not correct
3. Correct – Internal audit should not have operational responsibilities so should not authorise transactions or routinely prepare bank reconciliations.
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.

The scope and objectives of the internal audit function vary widely and depend on the size and structure of the entity and the requirements of its management.

Which ONE of the following functions should the internal audit NOT perform, and thus still operate effectively?

Select ONE answer:

1. Examination of financial and operational information for management
2. Authorisation of transactions in excess of the limits set by management
3. Review of accounting systems and related controls
4. Advising management on cost-effective controls for systems and activities

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 2

1. Not correct
2. Correct – Internal audit should not have operational responsibilities so should not authorise transactions or routinely prepare bank reconciliations.
3. Not correct
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.

Which ONE of the following activities would NOT typically be performed by both the internal and external auditor?

Select ONE answer:

1. Review of the efficiency of operations
2. Review of compliance with laws and regulations
3. Assessment of the effectiveness of internal controls
4. Carrying out tests of details on transactions and balances

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 1

1. Correct – The external auditor may identify efficiency issues during the statutory audit but audit work is not specifically planned with this objective.
2. Not correct
3. Not correct
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.

To which ONE of the following stakeholders / parties would the internal auditor report into?

Select ONE answer:

1. Shareholders
2. Employees
3. External auditors
4. Board of directors

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 4

1. Not correct
2. Not correct
3. Not correct
4. Correct – external auditors report to the shareholders and, although internal auditors will normally provide information to the external auditors, they do not formally report to them.

This work is licensed under a Creative Commons Attribution 4.0 International License.

To which ONE of the following stakeholders / parties would the internal auditor report into?

Select ONE answer:

1. Employees
2. Shareholders
3. Audit committee
4. External auditors

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 3

1. Not correct
2. Not correct
3. Correct – external auditors report to the shareholders and, although internal auditors will normally provide information to the external auditors, they do not formally report to them.
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.