ACCT520 Unit #4

When the executive management of an organization decided to form a team to investigate the adoption of an activity-based costing (ABC) system, an internal auditor was assigned to the team. The best reason for including an internal auditor is the internal auditor’s knowledge of

Internal auditors should review the means of physically safeguarding assets from losses arising from

Which of the following activities is outside the scope of internal auditing?

Standard 2120 states that the internal audit activity must evaluate the effectiveness and contribute to the improvement of risk management processes. Conformance with Standard 2120 is best demonstrated by

Which of the following is not an activity undertaken as part of risk management?

In the risk management process, management’s view of the internal audit activity’s role is likely to be determined by all of the following factors except

Which of the following is the most accurate term for a process to identify, assess, manage, and control potential events or situations to provide reasonable assurance regarding the achievement of the organization’s objectives?

The internal audit activity must evaluate the effectiveness and contribute to the improvement of risk management processes. With respect to evaluating the adequacy of risk management processes, internal auditors most likely should

Which of the following is the correct order of steps in the risk management process?
Identify risks
Monitor risk responses
Formulate risk responses
Assess and prioritize risks
Identify context

When assessing the risk associated with an activity, an internal auditor should

The primary reason that a bank would maintain a separate compliance function is to

Which of the following represents the best statement of responsibilities for risk management?

An internal auditor plans to conduct an audit of the adequacy of controls over investments in new financial instruments. Which of the following would not be required as part of such an engagement?

Which of the following goals sets risk management strategies at the optimum level?

Which of the following threatens the independence of an internal auditor who had participated in the initial establishment of a risk management process?

Which of the following may be assessed by the internal auditor as part of the risk management process?
Significant risks
Ongoing monitoring activities
Previous risk evaluation reports by management, internal auditors, external auditors, and any other sources

If an organization has no formal risk management processes, the chief audit executive should

Risk modeling or risk analysis is often used in conjunction with development of long-range engagement work schedules. The key input in the evaluation of risk is

Which of the following statements regarding monitoring risk responses is false?

Which of the following are part of the risk analysis process?
Assessing the significance of an event
Assessing the event’s likelihood
Considering the means to manage the risk

A chief audit executive is reviewing the following enterprise-wide risk map:

Which of the following is the correct prioritization of risks, considering limited resources in the internal audit activity?

Risk modeling in a consulting service is done by ranking the engagement’s potential to
Improve management of risk
Add value
Improve the organization’s operations

Determining whether risk management processes are effective is a judgment resulting from the internal auditor’s assessment that
Organizational objectives support and align with the organization’s mission
Significant risks are identified and assessed
Appropriate risk responses are selected that align risks with the organization’s risk appetite
Relevant risk information is captured and communicated in a timely manner across the organization

Which of the following statements about risk management is false?

Which of the following is a false statement concerning risk management?

Which of the following is a true statement about the use by senior management and the board of the internal audit activity as a source of information about risk management processes?

Which of the following is a false statement concerning risk management? Risk management processes

Senior management has identified the following risk areas within the organization:
Derivatives trading:
Likelihood high, Impact low
Materials acquisition:
Likelihood low, Impact low
Petty cash:
Likelihood high, Impact low
Bond issue:
Likelihood low, Impact high
Transportation fleet:
Likelihood high, Impact medium
Which of the following is a true statement in terms of overall risk exposure of the areas named?

Senior management has identified the following risk areas within the organization:
Derivatives trading:
Likelihood high, Impact high
Materials acquisition:
Likelihood low, Impact low
Petty cash:
Likelihood high, Impact low
Bond issue:
Likelihood low, Impact high
Transportation fleet:
Likelihood high, Impact medium
Which of the following is a false statement in terms of overall risk exposure of the areas named?

Internal audit has prepared the following risk map for the upcoming audit year:

Where should the chief audit executive devote the most internal audit resources?

The internal auditors are assessing the risk of fraud involving senior management. An impact factor is

Who is responsible for the organization’s risk management and control processes?
The internal auditor.
The external auditor.
Senior management.
The board of directors.

An internal auditor plans to audit the adequacy of controls over credit approval. Which of the following is not a required procedure in such an engagement?

The internal auditor should evaluate the adequacy of controls over the safeguarding of assets from all of the following except

When a customer fails to pay his or her invoice within 2 months, a notification is sent to inform the credit manager of the situation. This is an example of which kind of event identification method?

Which of the following are core assurance roles provided by the internal audit activity?
Giving assurance on risk management processes
Evaluating risk management processes
Reviewing the management of key risks
Setting the risk appetite

Which of the following are roles that the internal audit activity should not undertake since they would threaten its independence and objectivity?

Risk management, at any level, consists of
Identifying potential events that may affect the entity
Managing the associated risk to be within the entity’s risk appetite

The level of assurance that risk management can provide regarding the achievement of entity objectives is

Senior management performed the following steps during its recent deliberations over risk management:
Identified all the risks that might impede the achievement of the company’s mission.
Designed new procedures to mitigate the risks associated with surplus equipment, one of the areas in which the risk of adverse impact was both material and likely.
Ensured that the director of surplus management understood and enacted the new procedures.
Reviewed regular reports from internal audit about the effectiveness of the new procedures for surplus equipment.
The most serious deficiency with the process is that

Which of the following factors affects the control risk of an organization?

What is the board’s role in the risk management process?

Risk is measured in terms of

The Chief Audit Executive’s responsibilities for risk management include which of the following?

A recent inventory shortage at XYZ Corp., an unaffiliated supplier, contributed to production failures at OPS Corp. in the current period. To avoid future production failures because of supplier inventory shortages, the most appropriate method is for OPS to

Which of the following is a factor affecting risk?

Management considers risk appetite for all of the following reasons except

Each of the following is a limitation of enterprise risk management (ERM), except

According to COSO, which component of enterprise risk management (ERM) addresses an entity’s operating structures and core values?

Which of the following is closely related to traditional risk management instead of enterprise risk management (ERM)?

Which of the following members of an organization has ultimate ownership responsibility of the enterprise risk management, provides leadership and direction to senior managers, and monitors the entity’s overall risk activities in relation to its risk appetite?

According to COSO’s ERM framework, which view of risk is fully integrated?

The function of the chief risk officer (CRO) is most effective when the CRO

Enterprise risk management

Inherent risk is