Audit Management – A Practical Approach July 2010
1
1
AUDIT MANAGEMENTA PRACTICAL APPROACH
Presented by William Allen1
AAUDITUDIT MMANAGEMENTANAGEMENTAA PPRACTICALRACTICAL AAPPROACHPPROACH
Presented byWilliam Allen, CPA (retired)
AUDIT MANAGEMENTA PRACTICAL APPROACH
International InstituteGraduate School
900 Fort Street, Suite 1540Honolulu, HI 96813
2
www.graduateschool.edu
Expectations
Course Goals
Course Objectives
Ground Rules
My Reward
3Audit Management – A Practical Approach
AUDIT MANAGEMENT - A PRACTICAL APPROACH
www.graduateschool.edu
Audit Management – A Practical Approach July 2010
2
1
AUDIT MANAGEMENTA PRACTICAL APPROACH
Presented by William Allen4
Expectations -What do you expect to get fromthis course?
• CPE
• Audit Tools
• Both
• Other?
Audit Management – A Practical Approach
AUDIT MANAGEMENT - A PRACTICAL APPROACH
5
COURSE GOALS
•• To provide one or more techniques toenable more effective and efficient auditmanagement
• To provide one or more techniques toenable less stressful audit management
Audit Management – A Practical Approach
6
COURSE OBJECTIVES
1. Describe what each audit phasecontributes to finding development;
At course end, you will be able to:
Audit Management – A Practical Approach
&&
Audit Management – A Practical Approach July 2010
3
1
AUDIT MANAGEMENTA PRACTICAL APPROACH
Presented by William Allen7
CCOURSEOURSE OOBJECTIVESBJECTIVES2. Describe -
a. The decisions that need to be madeat each phase, and
b. The role that story conferences playin making those decisions;
Audit Management – A Practical Approach
&&
8
3. Illustrate how well-stated objectivesform the basis for:• field work• monitoring the ongoing conduct
of the audit, and• reporting
Audit Management – A Practical Approach
&&
CCOURSEOURSE OOBJECTIVESBJECTIVES
9
4. Describe -• the purpose and anticipated
product of the audit phases, and
• which team members shouldattend and what their roles are
Audit Management – A Practical Approach
CCOURSEOURSE OOBJECTIVESBJECTIVES
Audit Management – A Practical Approach July 2010
4
1
AUDIT MANAGEMENTA PRACTICAL APPROACH
Presented by William Allen
Audit management expertise leads toskillfully managing audits that are –
10
WHY REPEAT THE BASICS?
1. successful
2. efficient
3. noteworthy
Audit Management – A Practical Approach
11
SUCCESSFUL AUDITS -benefit users through-
• Management improvements
• Future operating economies
• Program integrity
• Recoveries of misspent funds
Audit Management – A Practical Approach
Enable the auditorganization toprovide greateraudit coverage bystretching existingaudit resources.
12
EFFICIENT AUDITS-
Audit Management – A Practical Approach
Audit Management – A Practical Approach July 2010
5
1
AUDIT MANAGEMENTA PRACTICAL APPROACH
Presented by William Allen
Lead to:
13
SUCCESSFUL AUDITS -
recognition
less stress
Success
Audit Management – A Practical Approach
change
14
COURSE SECTIONS
Section 1 - Audit Selection Methods -What to Audit
Section 2 - The Role of Surveys -Where to Begin
Section 3 - Audit Design Considerations -What to Include
Section 4 - Formulating an Audit Plan -How to Proceed
Audit Management – A Practical Approach
15
AUDIT SELECTION METHODS
1. Define the five phases (stages) ofreport development
2. Define the timing of story conferencesduring the course of the audit
3. Describe and practice audit selectionmethods
Audit Management – A Practical Approach
Section 1 - Objectives
Audit Management – A Practical Approach July 2010
6
1
AUDIT MANAGEMENTA PRACTICAL APPROACH
Presented by William Allen16
FIVE PHASES OF A PERFORMANCE AUDIT
1. Audit Selection
2. Survey
4. Fieldwork
5. Reporting
3. Audit Planning
Audit Management – A Practical Approach
17
EACH OF THE 5 AUDIT PHASES HAS ANIDENTIFIABLE PRODUCT THATADVANCES THE ASSIGNMENT
TOWARDS THE GOAL OF APUBLISHABLE REPORT.
Audit Management – A Practical Approach
INTERNAL AUDIT PRODUCTS
STORY CONFERENCES
18
Conferences/Meetingsat key phases in theaudit move the processforward toward thatfinal goal -
A Publishable Report
Audit Management – A Practical Approach
Audit Management – A Practical Approach July 2010
7
1
AUDIT MANAGEMENTA PRACTICAL APPROACH
Presented by William Allen19
1. Pre-Survey
2. Post-Survey
3. Field Work Verification
4. Report Planning
Used to aid the Audit Team indeveloping a product at each stage(phase) of the assignment
Results
Audit Management – A Practical Approach
STORY CONFERENCES
AUDIT SELECTION
20
3 - Requests
Three different sources for identifyingwhat to audit -
2 - Ad Hoc Selection
1 - Annual Plan
Audit Management – A Practical Approach
21
ANNUAL PLAN
Popular approach
Essentially “qualitative”
Generally “quantifiable”
Audit Management – A Practical Approach
Audit selection using a formalassessment is:
Audit Management – A Practical Approach July 2010
8
1
AUDIT MANAGEMENTA PRACTICAL APPROACH
Presented by William Allen22
POPULAR APPROACH
Issue assessment isan accepted andgenerally effectiveapproach for makingselections in annual(or strategic) workplanning.
Audit Management – A Practical Approach
23
QUALITATIVE SELECTION
The Annual Plan approach isessentially qualitative.
It is based on theexperience andjudgment of seniormembers of the auditstaff.
Audit Management – A Practical Approach
24
QUANTITATIVE SELECTION
For consistency inmaking selections, andfor incorporating the
input of variousmembers of the staff,
selections may be“quantified” using a
Rating Form
Audit Management – A Practical Approach
Audit Management – A Practical Approach July 2010
9
1
AUDIT MANAGEMENTA PRACTICAL APPROACH
Presented by William Allen25
Using a Rating Form, the audituniverse is stratified into“manageable audit units” (e.g.programs) and selection factors areapplied to assess and rate each unit interms of problems, opportunities,concerns, and risk. The factors arethen rated on a scale.
Audit Management – A Practical Approach
QUANTITATIVE SELECTION
26
Possible Rating Form ExampleSelection FactorsAuditable
Units BudgetAmount
PublicConcern
Legis.Concern
Mgmt.Concern
PreviousAudit
MaximumTotal Score
Weight25% 20% 20% 20% 15% 100%
Activity A
Activity B
Activity C
Activity D
Audit Management – A Practical Approach
QUANTITATIVE SELECTION
27
auditors to gain anunderstanding of the Natureand Profile of the Program andUser Needs
Generally AcceptedGovernment AuditingStandards
REQUIRE
Audit Management – A Practical Approach
QUANTITATIVE SELECTION
Audit Management – A Practical Approach July 2010
10
1
AUDIT MANAGEMENTA PRACTICAL APPROACH
Presented by William Allen
AUDIT SELECTION
28Audit Management – A Practical Approach
Audit Selection MethodsExercise&Break
29
Possible Solution(s)
Audit Management – A Practical Approach
AUDIT SELECTION
30
SURVEY STAGES
1. Describe the role surveys play inplanning
2. Define three kinds of survey
3. List survey design considerations
&Audit Management – A Practical Approach
Section 2 - Objectives
Audit Management – A Practical Approach July 2010
11
1
AUDIT MANAGEMENTA PRACTICAL APPROACH
Presented by William Allen31
4. Describe and compare the Pre-Survey and Post-SurveyConferences
5. Follow an agenda to conduct ameaningful Pre-SurveyConference
6. Describe and produce a SurveyPlan
Audit Management – A Practical Approach
SURVEY STAGES
32
THE ROLE OF SURVEYS
The audit survey is used toconfirm the choice(s) made inthe Audit Selection process.
Audit Management – A Practical Approach
33
An overridingpurpose is to
provide the basis forformulating audit
objectives
Go Decision
No-Go Decision
Modify Objective
Audit Management – A Practical Approach
THE ROLE OF SURVEYS
Audit Management – A Practical Approach July 2010
12
1
AUDIT MANAGEMENTA PRACTICAL APPROACH
Presented by William Allen34
1. Strategic Survey
2. Problem Identification
3. Design Survey
THREE TYPES OF SURVEY
Audit Management – A Practical Approach
35
Surveys Provide a FundamentalBasis to Demonstrate Adherence to
Planning as Required byGenerally AcceptedGovernment Auditing
Standards[GAGAS]
SURVEY DESIGN CONSIDERATIONS
Audit Management – A Practical Approach
36
GAGAS states that -
“Auditors must adequatelyplan and document theplanning of the worknecessary to address theaudit objectives to meet theneeds of users.”
[Sec. 7.06][Sec. 7.06]
Audit Management – A Practical Approach
SURVEY DESIGN CONSIDERATIONS
Audit Management – A Practical Approach July 2010
13
1
AUDIT MANAGEMENTA PRACTICAL APPROACH
Presented by William Allen
“GO“GO –– NO GO”NO GO”DECISIONS CANDECISIONS CANBE DIFFICULT FORBE DIFFICULT FORTHETHE AUDITEEAUDITEEWHENWHENINDEPENDENCE ISINDEPENDENCE ISCOMPROMISED!COMPROMISED!
37
38
• Permit Team Based Decisions
• Promote Information Sharing
• Builds Consensus on AuditDirection
• Builds Consensus on Audit Product
STORY CONFERENCES
Audit Management – A Practical Approach
39
Pre-Survey Post-SurveyPurpose To prepare for the survey To plan the auditProduct Survey plan Audit programPlayers Assignment maker Assignment maker
Audit manager Audit managerAuditor-in-charge Auditor-in-chargeAuditors assigned Auditors assigned
Preparation Only what can be done in the office:consult directories, budget, website,report archive, or make telephonecalls, etc.
Conduct survey [optionalfor large staffs; prepareand circulate summary]
PRE- & POST-SURVEY CONFERENCES
Audit Management – A Practical Approach
Audit Management – A Practical Approach July 2010
14
1
AUDIT MANAGEMENTA PRACTICAL APPROACH
Presented by William Allen40
PRE-SURVEY CONFERENCE AGENDA
1. Assess the Assignment
2. ID Known Areas of Concern
3. ID Questions to Answer
4. Decide Type of Surveyto Perform
Audit Management – A Practical Approach
41
ASSESS THE ASSIGNMENTUsed to share information, availableprior to conducting the survey, with teammembers in order to plan the job.
-Requestor’s Interests- Auditee Position
- Customer Concerns- Stakeholder Interests
- Public’s PerceptionAudit Management – A Practical Approach
42
• When did the concern(s) firstsurface?• How has this issue been
defined?
Pre-Survey Conferences are used todetermine an assignments direction byidentifying known Areas of Concern
AREAS OF CONCERN
Audit Management – A Practical Approach
Audit Management – A Practical Approach July 2010
15
1
AUDIT MANAGEMENTA PRACTICAL APPROACH
Presented by William Allen43
Organizational Mission?Intended/Desired Outcomes?
Services Provided Results?Outcomes Measures?
Organizational Outputs?
Pre-Survey Conferences are used toidentify the Questions to Answer inthe survey.
SURVEY QUESTIONS
Audit Management – A Practical Approach
44
Outcomes - Purpose of the activity,Population to be served...
Outputs - What is to be done.Operations/Process - How and Who is to do it.
Effort/Resources - How much can be spent,Spent on what...
Determine the laws and regulationsthat govern the organization,program, or function?
Audit Management – A Practical Approach
SURVEY QUESTIONS
45
What is the nature of goods and servicesprovided?
MEASURED OUTPUTS INCLUDE...
How are Outputs measured?
How & Where is the program operated?
How is efficiency measured?
What effort or resources are used?
Audit Management – A Practical Approach
Audit Management – A Practical Approach July 2010
16
1
AUDIT MANAGEMENTA PRACTICAL APPROACH
Presented by William Allen46
During the Pre-Survey Conference,the Audit Team determines the typeof survey to perform as determinedby the information shared in theconference
TYPE OF SURVEY TO PERFORM
• Strategic Survey• Problem Identification• Design Survey
Audit Management – A Practical Approach
47
Determine what should be completed by& schedule next meeting.
PLAN THE SURVEYIdentify: Survey data to obtain, and
From whom to obtain it;Determine survey elapsed days:
When is our report needed? Why is that the date? What will the report be used for?
Determine survey staff days.
Audit Management – A Practical Approach
48
SAMPLE Survey Data FormSurvey Data Form
Formulating Assignment Objectives
1. What is the audit subject? __________________________________________________________
2. What is the nature of the issue? ______________________________________________________
3. Who is the recipient of our report? ___________________________________________________
4. Who are the stakeholders? __________________________________________________________
5. What is the auditee’s position ________________________________________________________
6. Do views of program consumers need to be considered (check v) Yes No
7. What performance aspect(s) is at issue? ________________________________________________
Is focus on (check v) Processes Accomplishments Impact
8. What finding elements are we asked or do we expect to develop (check v)?
9. How will the information we produce be used; what effect do we expect? ______________________________________________________________________________________________________
10. What criteria/impact design might be used? _____________________________________________
11. Date our report is needed? ___________________________________________________________
Audit Management – A Practical Approach
Audit Management – A Practical Approach July 2010
17
1
AUDIT MANAGEMENTA PRACTICAL APPROACH
Presented by William Allen49
SAMPLE SURVEY PLAN MATRIX
Questions/Issuesto Address
Sources ofInformation
SurveyActivities
Staff Deadline
Audit Management – A Practical Approach
50
SURVEY PLAN MATRIXDesign Matrix
Researchablequestion(s)
Informationrequired
Informationsource(s)
Overall designstrategy
Data collectionmethods
Data analysismethods Limitations What the analysis will allow you to say
Is contractorperformance inaccordancewithcontract terms?
--Contract;
--Individual taskorders;
--System life cycledocumentation ofsystem performancemeasures, e.g., aperformancemeasurement plan,acquisition programbaseline document,etc;
--Documentation ofcontractorperformance, todate;and
--Documentation ofcontractor chargesand PBO paymentsmade to date.
--PBO,
--Arthur AndersenConsulting; and
--possibly, OIGsystems audit group.
Interview appropriatePBO and AndersenConsulting officialsand review applicabledocumentation toobtain criteria(contract terms andany establishedperformancemeasures) andcondition (contractorperformance).Compare condition tocriteria (i.e.performance tocontract terms andavailableperformancemeasures) to assesswhether contractorperformance Is inaccordance withcontract terms.
Interviewdepartment andcontract officialsand obtain relevantdocumentation.
Review contractor’sreported status of effortsand compare to theinformation included inreports to the PBO, anyestablished performancemeasures, and paymentsreceived, to date.
Determine what, if anythingPBO is doing to managethe contract, specifically;
--what, if anything, hasbeen done to validate/testthe status of contractorperformance.
--what, if anything, hasbeen done priortoapproving any paymentsmade, to date (i.e. whatinformation is required toverify payments are earnedand due to the contractorand how does it equate tocontract performance).
Contract performancemay vary, meaning thatsome performance ofthe contractmay not bein tangible, verifiableproducts and mayrequire judgement(both departmental andauditor) as to the levelof performance inrelation to the contractterms and/orestablishedperformance measures.
May require technicalassistance from ourOIGsystems auditgroup to assess thecontractor’sperformance in relationto the contract terms.
Contractor performance is or is not in accordancewith contract terms. Specifically, why or why notand an assessment of whether it does or does notequate to dollars.
Audit Management – A Practical Approach
51Audit Management – A Practical Approach
Surveys Exercise&Break
SURVEY STAGES
Audit Management – A Practical Approach July 2010
18
1
AUDIT MANAGEMENTA PRACTICAL APPROACH
Presented by William Allen52
Possible Solution(s)
Audit Management – A Practical Approach
SURVEY STAGES REINFORCEMENT QUESTIONS
53
AUDIT DESIGN CONSIDERATIONS
1. Define and use a formula for objectivesthat promotes development of findingelements
2. Explain the relationship betweenobjectives and findings
&Audit Management – A Practical Approach
Section 3 - Objectives
54
3. Demonstrate how the objectivesprovide a basis for planning.
4. Define the role of sub-objectives inplanning the audit data collection andanalysis steps.
Section 3 - Objectives (continued)
Audit Management – A Practical Approach
AUDIT DESIGN CONSIDERATIONS
Audit Management – A Practical Approach July 2010
19
1
AUDIT MANAGEMENTA PRACTICAL APPROACH
Presented by William Allen55
Well-Stated Objectives Identify and Promotethe Development of Finding Elements
FORMULA FOR OBJECTIVES
1. A set of objectives starts with a “yes/no”question that sets up a condition compared tocriteria -
For example:For example:Was the subject’s performance up to standard forthe designated aspect of performance?
Did the auditee comply with the terms of itsaward?
Audit Management – A Practical Approach
56
2. If the performance was not up to standardfor that performance aspect, what are theconsequences?
For example:For example:Did the failure to meet the standards add to the costof the activity?
Was the intended population for the activity/servicesadversely affected?
Were the consequences significant?
Audit Management – A Practical Approach
FORMULA FOR OBJECTIVES [CONT.]
57
3. If the consequences are significant, what arethe causes of not performing up tostandard for that aspect of performance?
For example:For example:Was the failure to meet the standard(s) isolated orsystemic?
Was the failure to meet the standard(s) anorganizational issue or a regulatory issue?
Audit Management – A Practical Approach
FORMULA FOR OBJECTIVES [CONT.]
Audit Management – A Practical Approach July 2010
20
1
AUDIT MANAGEMENTA PRACTICAL APPROACH
Presented by William Allen58
PERFORMANCE ASPECTSProcess Productivity, Correctness, Competition
Time Timeliness, Promptness, Duration
Quantity Amount, Number, Frequency,Sufficiency
Quality Eligibility, Accuracy, Completeness,Safety, Security, Satisfaction
Cost Opportunity Cost, Direct Cost, IndirectCost
Audit Management – A Practical Approach
59
FINDING ELEMENTSFindings are the answers to well stated
audit objectives!
Criteria What should be happening...Condition What is happening...Effect What are the consequences...Cause What are the reasons this occurred...Recommendation What will correct the cause...
Audit Management – A Practical Approach
60
Objectives SubobjectivesAudit Steps
[Data Collection& Analysis]
Staff Due Date
Audit Management – A Practical Approach
EXAMPLE WORKSHEET
Objectives & Subobjectives
Audit Management – A Practical Approach July 2010
21
1
AUDIT MANAGEMENTA PRACTICAL APPROACH
Presented by William Allen61
Audit Management – A Practical Approach
Survey Exercise&Break
AUDIT DESIGN CONSIDERATIONS
62Audit Management – A Practical Approach
EXERCISE SET OF OBJECTIVES
• Are workers’ compensation medical paymentsmade on time by the State General Fund incompliance with state law?
• If not, how does the late payment affect thestate, the client, and the medical vendor?
• If significant consequences to state, client, andmedical vendors, why were payments not madewithin the 30 days required by statute?
What are some possible SubWhat are some possible Sub--objectives to theobjectives to thefollowing Objectives?following Objectives?
63
Possible Solution(s)
Audit Management – A Practical Approach
AUDIT DESIGN CONSIDERATIONS
Audit Management – A Practical Approach July 2010
22
1
AUDIT MANAGEMENTA PRACTICAL APPROACH
Presented by William Allen64
FORMULATING AN AUDIT PLAN
1. Describe the role a Post-SurveyConference can play in audit planning
2. Follow an agenda to conduct an effectivePost-Survey Conference
3. Explain the basis for “Go/No Go”decision
Audit Management – A Practical Approach
SECTION 4 - OBJECTIVES
65Audit Management – A Practical Approach
The Post-Survey Conference builds the auditplan by consensus. Audit plans using thistechnique are more likely to –
• develop findings that the whole teamagrees on – “buy-in”
• produce a minimum of irrelevant data• lead to a report draft that requires fewer
major review changes• pays off in the end in more reliable results
POST-SURVEY CONFERENCE
66Audit Management – A Practical Approach
1. Make a go/no go decision about proceedingwith the audit:
• ID the primary customer and/or user’sinterests
• ID secondary customers and theirinterests
Consider: What users want to know.What we want them to know.How will the information be used.
POST-SURVEY CONFERENCE AGENDA
Audit Management – A Practical Approach July 2010
23
1
AUDIT MANAGEMENTA PRACTICAL APPROACH
Presented by William Allen67
Audit Management – A Practical Approach
2. Specify the subject of the audit.
Consider where the issue or risk resides
• Entity, including external organizations
• Function and/or program
• Activity
POST-SURVEY CONFERENCE AGENDA
68Audit Management – A Practical Approach
3. Decide whether to focus on process or results.
Consider:
Primary objective – What condition to pursue?
Results focus – Are procedures, controls,methods, etc., likely to providean opportunity for correction orimprovement?
POST-SURVEY CONFERENCE AGENDA
69Audit Management – A Practical Approach
4. ID the performance aspect.
It identifies some measurable area ofresponsibility associated with the mission ordefinition of the activity.
An issue will have one or more performanceaspects at its core.
POST-SURVEY CONFERENCE AGENDA
Audit Management – A Practical Approach July 2010
24
1
AUDIT MANAGEMENTA PRACTICAL APPROACH
Presented by William Allen70
Audit Management – A Practical Approach
5. Formulate a condition questions that can beanswered “yes” or “no.”
6. Formulate supplementary questions foreffect and cause, if appropriate
7. Decide whether to go forward with the job –
Consider:Consider: Is the customer interested?Is the issue significant?Is the issue measurable?
POST-SURVEY CONFERENCE AGENDA
If it is a “Go” decision – develop the AuditPlan:
• Develop subobjectives to ID findingelements
• Audit scope & time period• Audit steps• Cite constraints & limitations• ID staff assignments• Set due dates
71
POST-SURVEY CONFERENCE AGENDA
Audit Management – A Practical Approach
72
Objectives SubobjectivesAudit Steps
[Data Collection& Analysis]
Staff Due Date
“Go” Decision = Develop An Audit Plan
Audit Management – A Practical Approach
POST-SURVEY CONFERENCE AGENDA
Audit Management – A Practical Approach July 2010
25
1
AUDIT MANAGEMENTA PRACTICAL APPROACH
Presented by William Allen73
Audit Management – A Practical Approach
Formulating an Audit PlanReinforcementQuestions&Break
FORMULATING AN AUDIT PLAN
74
Possible Solution(s)
Audit Management – A Practical Approach
FORMULATING AN AUDIT PLANREINFORCEMENT QUESTIONS
NETWORK
75Audit Management – A Practical Approach
Contact me at –[email protected]
Audit Management Reinforcement Questions
Audit Selection Methods
1. Each of the 5 audit phases has an identifiable product that advances an assignmenttowards its goal?
• True
• False
2. The requirement that auditors to gain an understanding of the nature of theprogram to be reviewed and user needs is found in –
a. GAAP
b. GAGAS
c. CFRs
d. FAR
3. When an audit selection method is referred to as quantitative, it means that it isbased on the experience and judgment of senior members of the audit staff.
• True
• False
4. Audit Plans that are developed using sound planning techniques seldom requireon-going modification –
• True
• False
5. The review and assessment of internal controls is not a specific component ofgaining an understanding of the nature of the program to be audited -
• True
• False
Survey Stages
1. Which of the following is a type of survey used in planning audit assignments?
a. Strategic Survey
b. Problem Identification
c. Design Survey
d. All of the above
2. Pre-Survey Conferences are used to determine an assignments direction byidentifying known Areas of Concern.
• True
• False
3. Which of the following is a matter for resolution by attendees at a Pre-SurveyConference?
a. ID Known Areas of Concern
b. ID Questions to Answer
c. Decide Type of Survey to Perform
d. All of the above
4. When little is known about an entity, issue, and/or sources for information, whichis the preferred choice for the type of survey to perform?
a. Strategic Survey
b. Design Survey
c. Problem Identification Survey
d. None of the above
5. Which of following is not generally the function of an Audit Survey –
a. To provide the basis for formulating audit objectives
b. Identify known areas of concern
c. To confirm the choice(s) made in the audit selection process
d. To determine the effect of identified areas of concern
6. What are some possible Sub-objectives to the following Objectives?
• Are workers’ compensation medical payments made on time by the StateGeneral Fund in compliance with state law?
• If not, how does the late payment affect the state, the client, and themedical vendor?
• If significant consequences to state, client, and medical vendors, whywere payments not made within the 30 days required by statute?
Formulating an Audit Plan Reinforcement Questions
1. Audit Objectives define what the audit is to accomplish and Audit Scope & AuditMethodology define how to accomplish the work.
• True
• False
2. Audit Scope describes the work in data gathering while Audit Methodologydefines the boundary of the audit.
• True
• False
3. Audit Scope is concerned with the breadth of audit coverage while AuditMethodology covers the extent of the audit procedures.
• True
• False
4. Which of the following is NOT an Audit Constraint -
a. Time
b. Staff expertise
c. Cost
d. Design
Audit Management Reinforcement Questions
Audit Selection Methods
1. Each of the 5 audit phases has an identifiable product that advances an assignmenttowards its goal?
• True
• False
2. The requirement that auditors to gain an understanding of the nature of theprogram to be reviewed and user needs is found in –
a. GAAP
b. GAGAS
c. CFRs
d. FAR
3. When an audit selection method is referred to as quantitative, it means that it isbased on the experience and judgment of senior members of the audit staff.
• True
• False
4. Audit Plans that are developed using sound planning techniques seldom requireon-going modification –
• True
• False
5. The review and assessment of internal controls is not a specific component ofgaining an understanding of the nature of the program to be audited -
• True
• False
Survey Stages
1. Which of the following is a type of survey used in planning audit assignments?
a. Strategic Survey
b. Problem Identification
c. Design Survey
d. All of the above
2. Pre-Survey Conferences are used to determine an assignments direction byidentifying known Areas of Concern.
• True
• False
3. Which of the following is a matter for resolution by attendees at a Pre-SurveyConference?
a. ID Known Areas of Concern
b. ID Questions to Answer
c. Decide Type of Survey to Perform
d. All of the above
4. When little is known about an entity, issue, and/or sources for information, whichis the preferred choice for the type of survey to perform?
a. Strategic Survey
b. Design Survey
c. Problem Identification Survey
d. None of the above
5. Which of following is not generally the function of an Audit Survey –
a. To provide the basis for formulating audit objectives
b. Identify known areas of concern
c. To confirm the choice(s) made in the audit selection process
d. To determine the effect of identified areas of concern
6. What are some possible Sub-objectives to the following Objectives?
• Are workers’ compensation medical payments made on time by the StateGeneral Fund in compliance with state law?
• If not, how does the late payment affect the state, the client, and themedical vendor?
• If significant consequences to state, client, and medical vendors, whywere payments not made within the 30 days required by statute?
Formulating an Audit Plan Reinforcement Questions
1. Audit Objectives define what the audit is to accomplish and Audit Scope & AuditMethodology define how to accomplish the work.
• True
• False
2. Audit Scope describes the work in data gathering while Audit Methodologydefines the boundary of the audit.
• True
• False
3. Audit Scope is concerned with the breadth of audit coverage while AuditMethodology covers the extent of the audit procedures.
• True
• False
4. Which of the following is NOT an Audit Constraint -
a. Time
b. Staff expertise
c. Cost
d. Design