Internal Audit Exam Questions

2)  Internal auditing is going to be performing an assurance engagement dealing with controls over production and inventory. Some of the items to be covered in the engagement include:

• Determine if there is an issue with excess, obsolete or unsaleable inventory
• Determine if there are inventory shortfalls vs. what is shown in the general ledger
• Determine if inventory write-offs have appropriate approval and support
• Determine if there are material issues with the quality of the company’s finished products.

For each item, select the two best tests in the reading Audit Tests: Types, Advantages & Disadvantages which in your judgment are the most appropriate to gather the required evidence.  Briefly explain why you selected each test.   Briefly describe what evidence you are trying to obtain from each test.  For your response, you can create a chart. 

3)  The Foundation for Critical Thinking states that all subjects have a fundamental thought process.  In order to understand the thought process, they recommend raising some questions.  Please respond in your own words to the four questions below using what you have learned in this course.

1. a) What viewpoint is fostered in this field (i.e., how do internal auditors tend to view the world)?

1. b) What kinds of problems do they try to solve?
2. c) How do they go about gathering information?
3. d) What types of judgments and assumptions do internal auditors make?

4)  Explain whether you agree or disagree with the following statement:

For every control selected for testing, the internal auditor requires the same quality (relevance and reliability) and quantity (sufficiency) of audit evidence.

A yes or no answer is not sufficient.  I need to know why.  Please provide an example in your response. 

5) a)   When and in what ways do audit engagement communications occur?

1. b) What actions regarding audit engagement observations must the internal audit function take after the final engagement communication is disseminated?

6) Describe four barriers to implementing data analysis tools in internal auditing.  I want your thoughts.