Governance PDF

5. Which of the following statements regarding the 1. Working papers serve the following purpose for internal auditor's responsibility for detecting fraud in the internal auditor: the environment descr...

5. Which of the following statements regarding the 1. Working papers serve the following purpose for internal auditor's responsibility for detecting fraud in the internal auditor: the environment described in the scenario above is not correct? The auditor should:- A. Provide the auditee a place to make responses to audit recommendations. A. Detect fraud if red flags are present in the B. Make the audit report more readable by environment. providing a place to append exhibits. B. Have sufficient knowledge to correctly C. Provide the principal evidential support for identify indicators that fraud may have been the internal auditor's report. committed. C. Identify control weaknesses that could allow 2. During an audit of travel expenses, the fraud to occur. accounting supervisor tells the auditor that each D. Evaluate the indicators of fraud sufficiently expense report is reviewed and approved before to determine if a fraud investigation should costs are reimbursed to the traveler. Which of the take place. following is the best course of action for the auditor to take? A. Request the supervisor to put the statement 6. Which of the following statements is an audit in writing. objective? B. Review a sample of expense reports for proper approval. A. Observe the deposit of the day's cash C. Conserve audit resources by accepting the receipts. statement and redirect audit work into B. Analyze the pattern of any cash shortages. another area. C. Evaluate whether cash receipts are D. Corroborate this information with the adequately safeguarded. controller. D. Recompute each month's bank reconciliation. 3.Which of the following activities is not included in determining the audit schedule? 7. The results of an audit of cash indicate the bookkeeper signs expense checks and reconciles A. Developing audit programs. the checking account. The cash account was B. Assessing risk factors properly reconciled and no cash shortages were C. Planning workload requirements. detected. Select the appropriate overall audit D. Identifying auditable locations. opinion? A. In our opinion the system of internal control over cash is adequate. 4. Red flags are conditions that indicate a higher B. Based on the audit results it is our opinion likelihood of fraud. Which of the following would not that the system of internal control over cash be considered a red flag? is inadequate. C. The results of the audit indicate A. Management has delegated the authority to reconciliations have been properly make purchases under a certain dollar limit completed. to subordinates. D. In our opinion the physical cash handling B. An individual has held the same cash- procedures are adequate. handling job for an extended period without any rotation of duties. 8.risk associated with just-in-time (JIT) production C. An individual handling marketable securities is the is responsible for making the purchases recording the purchases, and reporting any A. Increased potential for early obsolescence discrepancies and gains/losses to senior of inventories of finished goods. management. B. High cost of material handling equipment. D. The assignment of responsibility and C. Potential for significant costs associated accountability in the accounts receivable with reworking defective components. D. Critical dependency on a few vendors. 9. A director of internal auditing uncovers a 13. What is the purpose of an audit? significant fraudulent activity which clearly involves the executive vice president to whom the director A. To satisfy the auditor reports. Which of the following best describes how B. To assist management to do financial the director should proceed? statement C. To provide reliable information to users A. Carry out an examination for the purpose of D. To avoid shareholder being cheated by determining the extent of the fraud. management B. Interview the executive vice president to obtain essential evidence. 14. What knowledge auditor need to possess? C. Notify regulatory authorities and police. D. Report the facts to the chief Audit executive A. Accounting knowledge officer and theaudit committee of the board B. Management knowledge of directors. C. Knowledge about law of a country D. Knowledge to gather and evaluate evidence 10. An internal auditor has detected probable employee fraud and is preparing a preliminary 15. What is auditing? report for management. This report should include: A. The process of finding fault in the financial A. A statement that an internal audit conducted information with due professional care cannot provide B. The process of creating financial statement absolute assurance that irregularities have C. The process of verifying the financial not occurred. statement B. The auditor's conclusion as to whether D. The process of creating evidence of sufficient information exists to conduct an financial statement investigation. C. The results of a polygraph test administered 16. In a principal agent relationship, who is to the suspected perpetrators) of the fraud. principal? D. A list of proposed audit tests to help disclose the existence of similar frauds in A. Auditor the future. B. Owner C. Management 11. In deciding whether recorded sales are valid, D. Accountant which of the following items of evidence would be considered most competent? 17. Which of the following is NOT the purpose of audit? A. A copy of the customer's purchase order. B. A memorandum from the director of the A. Ensure that financial statements are bias shipping department stating that another B. Ensure financial statement is true and fair employee verified the personal delivery of view the merchandise to the customer. C. Ensure that financial statement are relevant C. Accounts receivable records showing cash D. Ensure that financial statement are collections from the customer. objective D. The shipping document, independent bill of lading, and the invoice for the merchandise. 18. How auditor adds credibility of accounting reports? A. Assist in preparing financial statement 12. Evidence that is both the best available and B. Providing proof of evidence of accounting reliable is records C. Helps management with ideas to the A. Sufficient. business B. Competent. D. Provides opinion on true and fair view of C. Relevant. financial information D. Documentary. 19. Which of the following is external user of financial statement?  A. Bạnk D. Residual Income B. President of company C. Shareholder D. Management True or False 20. According to the Institute of Internal Auditors Code of Ethics, what should an internal auditor do if FALSE 24.Having a check list, and a mechanism he or she has a previous relationship with a client, in place is a surefire way to ensure good corporate or the client offers to buy him or her coffee or governance lunch? A. Report this information to the lIA B. Report this information to their state 25 _____ is safeguard to ensure the fiduciary attorney general responsibility. C. Report this information to the chief audit executive A. Audits D. Report this information to his or her company's CEO B, personal reports. C, end of year financial debtors. 21. A Stakeholder is someone who... D, the presidential system A. Wants to see company's bottom line. B. Answer to the board of directors, 26. A shareholder is C. As best that interests and accompanies A. someone who is invested in the company's success, success, D. Is hard to do a specific job. B. someone who sits at the corner of trustees, C. someone who profits from the bottom line, 22 Corporate governments can involve merging the D. someone who is worried about the carbon roles of ______ and the time footprint of the company B OR D A. CFO / President, 27. The following are characteristics of effective reward and incentive systems itself. B. COO/ President/Vice President, A. Performance measure. Perform for real and C. President/ Vice President, highly visible. D. CEO / Chairman of the Board. B. Structure. It's fixed to assure employees of consistency. C. Compensation system is perceived fair and 23 Effective corporate governance included all of equitable. the following except D. The objectives are well understood and well A. Accountability accepted B. Fairness C. Effectiveness  A. Shareholders 28. All of the following are types of information that B. Board of Directors all public corporations are required to disclose, except C. External auditors A. Quarterly and annual filings of financial D. Stakeholders information B. stock trading by insiders, 33. The purpose of privately owned company is to C. detail of new products under development, A. Maximize shareholder value. D. details of executive organization package. B. Maximize executive income. C. Whatever the owners want it to be 29. What is the difference between a shareholder and a stakeholder? D. None of the above. A. Shareholder is anybody who is affected by the organization. 34. Key players in a good corporate governance B. Stakeholder owns part of the public company are through shares of stocks. A. Directors and management of corporation C. A shareholder owns part of the public company through shares of stocks. B. Audit committee members D. A stakeholders, anybody can affect or disaffect C. Internal and external auditors the right of an organization D. Shareholder E. All of the Above 30. Which is not true about the needs of corporate governance? A. To avoid mismanagement. True or false B. To enable companies to operate more efficiently, TRUE 35. Corporate governance is most often viewed as both structure and relationship which C. to improve access to capital, determine corporate direction and performance. D. to gain risk, and safeguard stockholders and FALSE 36. Corporate governance does not have stakeholders. any impact on share prices. TRUE 37. The Board of Directors remains in effective control of the affairs of the companies all 31. Which is the best definition for corporate time. governance? TRUE 38.Transparency in board processes and a system of law and sound approaches by independence in the functioning of boards. FALSE 39.Accountability, transparency, governance and objectives are four pillars of the 32. Who runs the company operation for large corporate governance. companies TRUE 40. Board of Directors is the an elected C. Ensures that an objective and professional group of individuals that represents shareholders. relationship is maintained with the external and internal audit TRUE 41. Risk management department is a committee reportable to the board of directors. D. All of the above TRUE 42. A managing director must be an individual, a real person, and can be appointed for a maximum period of 5 years. 47. The charter and bylaws of the company provide the Board of consist of A. not less than 43. The purpose of public company is to... B. 2 or more directors A. maximize profit, C Not less than 2 nor more than 20 directors B. satisfy all the stakeholders equally, C. perpetuate the corporation, True or false D. none of the above. TRUE 48. Management reflects implementation of government's decisions. 44. Which is not the role of audit committee.? 49. Which is NOT TRUE about the needs for corporate governance? A. Review the work of internal audit. A. To avoid mismanagement B. Review the system of internal control. B. To enable companies operate more efficiently , C. Appropriate resources are committed to to improve access to capital, mitigate risk and companies. safeguard stakeholders D. May loss special investigations. C. To increase the accountability of your company and to avoid massive disasters before they occur D. To analyze of an organization’s operations and 45. elements of an effective corporate governance maintenance of systems of internal controls can systems are help detect and prevent various forms of fraud and other accounting irregularities. A. Accountability B. Transparency 50. Which is not the role of audit committee.? C. Regulatory Framework A. Review the work of internal audit. D. Business essence of responsibility B. Review the system of internal control. E. All of the above C. Appropriate resources are committed to companies. 46. Which is the main function of Audit Committee? D. May loss special investigations. A. Review issues of accounting policy and presentation of external financial accounting B. Monitors the work of the internal audit function 51. Which of the following is not one of the underlying principle of a corporate governance 55 Which of the following regarding agency theory A. Integrity is correct? B Acceptability A. Agency theory only applies to large entities. C Accountability B. Agents act in the best interest of the principal. D Openess C. Agents are assumed to be in a position of power. D. Agency theory defines the relationship between 52. Directors duty are unlikely to include agents and directors. A. a duty to propose high dividends for shareholders 56 Which is the main function of Audit Committee? B. a duty of care A. Review issues of accounting policy and C. a duty to keep proper accounting records presentation of external financial accounting D. a fiduciary duty B. Monitors the work of the internal audit function C. Ensures that an objective and professional relationship is maintained with the external and who runs large company... BOD, naulit lang na internal audit tanong D. All of the above 53 which of the following correctly Describe the composition of a unitary board. 57 Which of the following is not an example of a duty or responsibility of directors? A. Executive directors only. A. Having a conflict of interest but declaring it to the B. Non-executive directors only. board of directors. C. Both executive and non-executive. B. Continuing to transact with creditors when the company's liabilities exceed the assets. D. Non-executive and internal auditors. C. Researching and asking questions relating to the company's operations so as to be 54 Which of the following statements regarding informed. corporate governance is correct? D. Choosing to personally carry out instructions A. Corporate governance can temper growth. from the board rather than requesting subordinates to do so b. Good corporate governance can result in excessive risk-taking. c. Corporate governance often results in prompt and effective decision-making. d. The aim of corporate governance is to protect the interests of shareholders and the local economies.