Internal Auditing & Control Systems Flashcards
7 cards from real CCB practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Internal Auditing & Control Systems flashcards as text
Which type of internal audit focuses on whether organizational resources are used efficiently and economically?
Answer: Performance audit
Performance audits (also called operational or efficiency audits) assess whether resources are being used economically and efficiently to achieve organizational objectives.
A control that prevents errors or fraud from occurring in the first place is classified as a:
Answer: Preventive control
Preventive controls are designed to stop errors or irregularities before they occur, such as requiring dual authorization for large transactions.
Under the COSO framework, which component addresses the organizational values and ethical tone set by leadership?
Answer: Control environment
The control environment is the foundation of COSO and includes the ethical values, management philosophy, and tone set by leadership.
An auditor identifies that a single employee handles purchasing, receiving, and payment approval. This is best described as a:
Answer: Segregation of duties weakness
Segregation of duties requires that incompatible functions — such as authorizing, recording, and custody — be assigned to different individuals to reduce fraud risk.
Which internal audit activity involves reviewing controls before a new system goes live?
Answer: Pre-implementation review
Pre-implementation reviews assess the adequacy of controls in a new system before it becomes operational, reducing the risk of control gaps after launch.
The primary purpose of a control self-assessment (CSA) is to:
Answer: Allow management and staff to evaluate their own controls
CSA is a process where process owners and staff collaboratively assess the effectiveness of controls in their area, supplementing (not replacing) formal audits.
When an auditor tests a sample of transactions and finds no exceptions, this provides:
Answer: Reasonable assurance based on the sample tested
Sampling provides reasonable, not absolute, assurance because only a subset of transactions is tested, leaving inherent sampling risk.