Answer all 20 questions, then see your score at the end.
1. What is due diligence on a third party?
A. Deleting supplier records annually
B. Checks to understand the third party's background, integrity, capability, and relevant risks before or during a relationship
C. Paying every supplier in advance without review
D. Approving all vendors automatically
2. What should an internal audit report generally include?
A. Only the names of auditors
B. Only a copy of the general ledger
C. Only positive observations
D. Objectives, scope, findings, conclusions, recommendations or actions, and relevant management responses
3. What is a quality assurance and improvement program for internal audit?
A. A tax assessment process
B. A program that evaluates conformance with standards and promotes continuous improvement
C. A customer complaint register
D. A process that guarantees every finding is correct without review
4. What is a control owner?
A. The customer who pays the bill
B. The supplier who issues the invoice
C. The person who owns the audit firm
D. The person accountable for the design or operation of a specified control
5. What is a limitation of an audit engagement?
A. A constraint that prevents or restricts the planned work or available evidence
B. A finding that always proves fraud
C. A successful control test
D. A routine meeting invitation
6. What is random sampling?
A. Selecting only the easiest files to access
B. A method in which population items have a defined chance of selection, often equal in simple random sampling
C. Selecting only high-value transactions
D. Selecting only transactions approved by management
7. Which control helps prevent duplicate supplier payments?
A. Allowing unlimited manual payment entries
B. Duplicate invoice checks using supplier, invoice number, date, and amount
C. Removing invoice numbers from the system
D. Skipping supplier statement reconciliations
8. What should an internal auditor do before beginning fieldwork?
A. Understand the activity, assess risks, and define objectives and scope
B. Destroy prior audit records
C. Issue a final report immediately
D. Approve the department's budget
9. Who should generally oversee the internal audit function?
A. The cashier
B. The external supplier with the largest contract
C. The head of every audited department collectively
D. The board or its audit committee, with appropriate administrative support from management
10. Why should recommendations address root causes?
A. To make reports longer
B. To avoid identifying responsible processes
C. To reduce recurrence rather than only treat visible symptoms
D. To guarantee zero risk
11. What is retaliation against a whistleblower?
A. Adverse treatment because a person reported or participated in reporting concerns
B. An ordinary customer refund
C. A routine audit follow-up
D. A control that prevents unauthorized access
12. What is master data?
A. An auditor's personal contact list
B. Core reference data used across business processes, such as customer, supplier, or product records
C. A list of temporary audit observations only
D. A daily cash count sheet
13. What is a payroll ghost employee?
A. A retired employee with no payments
B. An employee transferred to another department with approval
C. A fictitious or unauthorized employee whose pay is improperly processed
D. An employee on approved annual leave
14. What is an audit issue escalation protocol?
A. A process for approving routine leave
B. A list of inventory items
C. A procedure for hiding findings from the board
D. A defined route for promptly communicating significant matters to appropriate levels
15. What should an auditor do if assigned to audit a process they recently managed?
A. Approve the process before testing it
B. Hide the prior responsibility
C. Disclose the impairment and follow safeguards or reassignment procedures
D. Ignore independence requirements
16. What is inspection in auditing?
A. Examining records, documents, or physical assets
B. Watching staff perform a task only
C. Asking a question only
D. Preparing a budget
17. What is a financial audit engagement within internal audit?
A. A replacement for the accounting department
B. An engagement examining financial processes, records, controls, or reporting
C. A process to set product prices
D. A guarantee of future earnings
18. What is an inventory audit intended to assess?
A. Existence, condition, valuation, completeness, and controls over inventory
B. Only employee performance reviews
C. Only the amount of share capital
D. Only the company's tax registration
19. What is an internal control?
A. A procedure used only by external auditors
B. A substitute for management responsibility
C. A guarantee that all fraud will be prevented
D. A process designed to provide reasonable assurance that objectives will be achieved
20. What is an audit finding?
A. A budget approved by the board
B. A documented condition identified during an engagement, supported by evidence and evaluated against criteria
C. A transaction that always indicates fraud
D. An auditor's unsupported suspicion