1.

The internal audit function is generally considered independent when it can carry out
its work freely and ___________.
A.Efficiently
B.Objectively
C.Effectively
D. All of the Above

2. It is an independent appraisal function established within the organization to carry out

the role and responsibility defined in the Internal Audit Charter.
A. Internal Audit Department
B. Independent Audit Department
C. External Audit Department
D. None of the above.

3. It is a formal written statement that defines the approved purpose, authority, and
responsibility of the internal audit activity.
A. Internal Audit Plan
B. Internal Audit Program
C. Internal Audit Charter
D. None of the above.

4. Statement 1.  External auditors generally consider operations a whole relative to

objectives while internal auditors focus primarily on financial systems that have a direct,
significant effect on the amounts reported in financial statements.
Statement 2.  External auditors consider even small amounts of fraud, waste, and abuse
as symptoms of underlying issues. The internal auditor considers just what materially affects
the financial statements since that is the nature of their engagement.
A. Only Statement 1 is correct.
B. Both statements are correct.
C. Only Statement 2 is correct.
D. Both statements are wrong.

5. ____________________  are expected to take a more focused oversight role in

respect of risk management and internal control.
 A.Internal Auditors
B.External Auditors
C.Audit Committees
D.None of the Above

6. Internal Audit is an independent, objective assurance and consulting activity designed

to add value and improve an organization's operations. It helps an organization accomplish
its objectives by bringing a systematic, disciplined approach to evaluate and improve the
efficiency of risk management, control, and governance processes.
A. TRUE
B. FALSE

7. Related to independence is the assumption that internal auditors have unrestricted

access to whatever they might need to make an objective assessment. That includes
restricted access to plans, forecasts, people, data, products, facilities, and records necessary
to perform their independent evaluations.
A. TRUE
B. FALSE

8. ____________________ is an appraisal activity established or provided as a service to

the entity. Its functions include, amongst other things, examining, evaluating and monitoring
the adequacy and effectiveness of internal control.
A. Internal Audit
B. Any of the Above
C. External Audit
D. None of the Above

9. Which of the following option is not one of the five directives from the IIA's Statement of
Responsibilities of Internal Auditing that are included in most charters?
A. Appraise the economy and efficiency with which resources are employed;
B. Review the means of safeguarding assets and, verify the existence of such assets;
C. Review the systems established to ensure compliance with those policies, procedures,
laws, regulations, and contracts which could have an important impact on operations and
reports.
 D. Create operations or programs to ascertain whether results are consistent with
established objectives and goals and whether the operations or programs are being carried
out as planned.
10. There are three important assumptions implicit in the definition, objectives, and scope
for internal auditing. Which is not one of them?
A. The assumption that the internal auditing function is staffed with people possessing the
necessary education, experience, and proficiency to perform competently.
B. Auditor independence.
C. The assumption that the evaluations and conclusions contained in internal auditing
reports are directed internally to management and the board, not to stockholders, regulators,
or the public.
D. The presumption that the evaluations and conclusions contained in internal auditing
reports are directed internally to management and the board, not to stockholders, regulators,
or the public.

11.Internal audit definition, audit objectives must be carried out in unbiased manner and free
from influence of management.
a. Assurance and consulting activity
b. Independence
c. Designed to add value
d. Systematic approach

12.Internal audit works and is guided by a set of standards to ensure credibility, reliability and
quality of internal audit practitioners and their audit work. This professional discipline called
as
a. Code of Ethics
b. Code of Standards
c. Corporate Governance
d. Audit Professionalism

13. Internal auditors perform their work honesty, diligence and responsibility.
a. Objectivity
b. Competence
c. Integrity
d. Confidentiality

14.State true or false- The final reports of the internal audits of an organization are shared
with shareholders or members who are outside the organization's governance structure. 
A. TRUE
B FALSE

15.An internal audit is completely similar to an external audit. 

A. TRUE
B. FALSE

16. Per IIA Standards, internal audit functions must establish:

A. Internal quality assurance and improvement program assessments.
B.External quality assurance and improvement program assessments.
C Both internal and external quality assurance and improvement program assessments.
D. neither internal nor external quality assurance and improvement program assessments.

17.Senior management has requested that the internal audit function perform an operational
review of the telephone marketing operations of a major division and recommend procedures
and policies for improving management control over the operation. The internal audit function
should:
A. Accept the audit engagement because independence would not be impaired
B. b. Accept the engagement, but indicate to management that recommending controls
would impair audit independence so that management knows that future audits of the
area would be impaired.
C. Not accept the engagement because internal audit functions are presumed to have
expertise on accounting controls, not marketing controls.
D.  Not accept the engagement because recommending controls would impair future
objectivity of the department regarding this client.
E.
18. Who is ultimately responsible for determining that the objectives for an internal audit
engagement have been met?
A. The individual internal audit staff member.
B. The CAE.
C. The audit committee.
D. The internal audit engagement supervisor.
19. Which of the following is the best reason for the CAE to consider the organization's
strategic plan in developing the annual internal audit plan?
A. To emphasize the importance of the internal audit function to the organization.
B. To make recommendations to improve the strategic plan.
C. To ensure that the internal audit plan supports the overall business objectives.
D. To provide assurance that the strategic plan is consistent with the organization's values.

20. The Standards requires policies and procedures to guide the internal audit staff. Which of
the following statements is false with respect to this requirement?
A.  A small internal audit function may be managed informally through close supervision and
written memos.
B. Formal administrative and technical audit manuals may not be needed by all internal audit
functions.
C.  The CAE should establish the function's policies and procedures.
D. All internal audit functions should have a detailed policies and procedures manual.