Free CGAP Auditing & Corporate Governance Questions and Answers

Question 1

The division of labor among employees so that, while a transaction is being carried out, recorded, and processed, the work of one employee is automatically inspected by another.

Accepted Answer

Internal check

Answer

Internal check is a system where the duties of employees are organized so that the work of one person is automatically verified by another, without any specific additional effort. This division of labor ensures that no single individual has complete control over a transaction, thereby reducing the risk of errors and fraud. It's a built-in control mechanism within the operational processes.

Question 2

Internal auditing's goal is to

Accepted Answer

To detect frauds and errors

Answer

Internal auditing's primary goal is to evaluate and improve the effectiveness of risk management, control, and governance processes. While it indirectly contributes to prevention by recommending improvements, its direct function involves systematically examining operations to detect existing frauds and errors. This detection allows management to implement corrective actions and strengthen controls.

Question 3

The process of looking at a document that backs up a recorded transaction to confirm the legitimacy and validity of that transaction

Accepted Answer

Vouching

Answer

Vouching is a core auditing procedure where an auditor examines documentary evidence, known as vouchers, that supports a recorded transaction. This process confirms the authenticity, validity, and proper authorization of the transaction. It ensures that entries in the books of accounts are legitimate and backed by appropriate evidence.

Question 4

Which of the following does not apply to the vouching process for cash sales:

Accepted Answer

Examine balance sheet

Answer

When vouching cash sales, an auditor focuses on documents directly related to the transaction, such as cash memos, the cash book, and counterfoils of pay-in slips. The balance sheet, however, is a summary financial statement at a specific point in time and does not provide the detailed transactional evidence needed to verify individual cash sales. Therefore, examining the balance sheet is not part of the vouching process for cash sales.

Question 5

Who is in charge of examining the assets?

Accepted Answer

Auditor

Answer

The auditor is an independent professional responsible for examining and verifying an entity's financial statements, which includes assessing the existence, valuation, and rights to assets. While management is responsible for safeguarding assets, the auditor's role is to provide an objective opinion on whether these assets are fairly presented in the financial statements.

CGAP - Certified Government Auditing Professional Practice Test

CGAP - Certified Government Auditing Professional Practice Test

Free CGAP Auditing & Corporate Governance Questions and Answers