CGRC Audit Management 2 — Questions and Answers
Question 1: Which audit sampling method selects every nth item from a population to achieve representative coverage?
- Random sampling
- Systematic sampling (Correct answer)
- Judgmental sampling
- Cluster sampling
Correct answer: Systematic sampling
Systematic sampling selects items at fixed intervals (every nth item) from the population, providing structured coverage.
Question 2: An auditor discovers a control deficiency that could lead to material misstatement but has not yet caused one. This is classified as:
- A material weakness
- A significant deficiency (Correct answer)
- An immaterial finding
- A control gap
Correct answer: A significant deficiency
A significant deficiency is a control deficiency that is less severe than a material weakness but important enough to merit attention.
Question 3: What is the primary purpose of an audit charter?
- To document individual audit findings
- To define the authority, responsibility, and scope of the internal audit function (Correct answer)
- To record audit team member assignments
- To outline the annual audit schedule
Correct answer: To define the authority, responsibility, and scope of the internal audit function
An audit charter formally establishes the internal audit function's purpose, authority, and responsibility within the organization.
Question 4: During audit fieldwork, which documentation technique maps a process end-to-end to identify control points and risks?
- Audit workpaper index
- Risk and control matrix
- Flowchart (Correct answer)
- Management representation letter
Correct answer: Flowchart
Flowcharts visually depict process steps and decision points, making it easier to identify where controls exist or are missing.
Question 5: When an auditor relies on work performed by an external specialist, the auditor must:
- Accept the specialist's conclusions without further review
- Evaluate the specialist's competence, objectivity, and scope of work (Correct answer)
- Obtain approval from the audit committee before using the findings
- Disclose the specialist's identity in the audit report
Correct answer: Evaluate the specialist's competence, objectivity, and scope of work
Auditors must assess a specialist's qualifications, independence, and the appropriateness of their work before relying on it.
Question 6: Which metric best measures the efficiency of the audit process?
- Number of findings per audit
- Percentage of recommendations implemented
- Actual audit hours versus budgeted hours (Correct answer)
- Audit committee satisfaction score
Correct answer: Actual audit hours versus budgeted hours
Comparing actual to budgeted hours directly measures how efficiently audit resources were used during an engagement.
Question 7: A follow-up audit is conducted primarily to:
- Identify new risks not covered in the original audit
- Verify that management has implemented agreed-upon corrective actions (Correct answer)
- Satisfy external regulatory requirements
- Expand the original audit scope
Correct answer: Verify that management has implemented agreed-upon corrective actions
Follow-up audits confirm whether management corrective actions from prior findings have been effectively implemented.
CGRC Audit Management 2
Which audit sampling method selects every nth item from a population to achieve representative coverage?