MANILA BUSINESS COLLEGE
COLLEGE OF ACCOUNTS AND BUSINESS
OPERATIONAL AUDITING
MIDTERM EXAM AND QUIZ
AY 2022-2023
MULTIPLE CHOICE ( MIDTERM EXAM)
1. With commitment to integrity and accountability, internal audit provides value to governing
bodies and senior management as an objective source of independent advice.
A. Integrity
B. Objectivity
C. Professional competence
D. Relevance and reliability
2. These are goals that management sets specifically related to stakeholder interests.
A. Financial objectives
B. Compliance objectives
C. Strategic Objectives
D. Operations Objectives
3. The process conducted by management to understand and deal with uncertainties (risks and
opportunities) that could affect the organization’s ability to achieve its objectives.
A. Governance
B. Control
C. Policies and Objectives
D. Risk management
4. The process conducted by management to mitigate risks to an acceptable level.
A. Control
B. Processes
C. Strategies
D. Corrective actions
5. The audit of operating units such as manufacturing plants, depots, subsidiaries, overseas operating
units, and so on. The audit scope may cover only accounting, financial and administrative controls it may
be broadened to other scope , EXCEPT.
A. Risk management
B. Human resource function
C. Administrative and operational controls
D. Governance processes
6. This is a process, effected by the entity’s board of directors, management and other
personnel, designed to provide reasonable assurance regarding the achievement of company’s
objectives.
A. Operational processes
B. Functional procedures
C. Internal Control
D. Governance process
7. Internal Control aims the achievement of the following objectives , EXCEPT
A. Reliability of Financial Reporting
B. Integrity of Internal Audit function
C. Effectiveness and efficiency of operations
D. Compliance with applicable laws and regulations
8. The freedom from conditions that threaten objectivity or the appearance of objectivity.
A. Independence
B. Integrity
C. Professional Behavior
d. Neutrality
9. ___________ means that an auditor is able to make impartial, unbiased judgments.
A. Reliability
B. Integrity
C. Independence
D. Objectivity
10. The following are the breakdown of activities consider in the audit universe wherein operational
auditing performs its function : The control environment, planning , risk management and management
information
A. Finance and Administration
B. Procurement
C. Marketing and sales
D. Management administration
11. The following are the breakdown of activities consider in the audit universe wherein operational
auditing performs its function : Staff training and development, recruitment, welfare and health
insurance
A. Personnel and human relations
B. Finance and Administration
C. Procurement
D. Marketing and sales
12. The following are the breakdown of activities consider in the audit universe wherein operational
auditing performs its function : Contingency planning, Remote working, Knowledge management and
processing operations
A. Personnel and human relations
B. Finance and Administration
C. Procurement
D. Information Technology
13. The following are the breakdown of activities consider in the audit universe wherein
operational auditing performs its function : Materials and energy, environmental issues, quality
control and safety
A. Finance and Administration
B. Procurement
C. Production/manufacturing
D. Materials Handling
14. Which of the following is one of the 5 Cs essential to the success of an Internal Auditor ?
A. Courage
B. Consistency
C. Collaboration
D. Candidness
15. __________________ is the act of transferring some of an organization’s business
processes to an outside provider to achieve cost reductions while improving service quality and
efficiency.
A. Business Process Outsourcing
B. Nonassurance services
C. Diversification
D. Joint venture
16. In assessing organizational risk in a manufacturing organization, which of the following
would have the greatest long-range impact on the organization?
A. Advertising budget
B. Production scheduling
C. Inventory policy
D. Product quality
17. What is a business process?
A. How management plans to achieve the organization’s objectives
B. The set of connected activities linked with each other for the purpose of achieving an
objective or goal
C. A group of interacting, interrelated, or interdependent elements forming a complex whole
D. A ifinite endeavor (having specific start and completion dates) undertaken to create a unique
product or service that brings about beneficial change or added value
18. Mapping risks to business process : decision is made to exit or divest of the activities giving
rise to the risk
A. Reduction
B. Acceptance
C. Avoidance
D. Pursuit
19. Exploit the risk if taking such a risk is advantageous to the organization or is necessary to
achieve a particular business objective
A. Pursuit
B. Acceptance
C. Reduction
D. Pursuit
20. A company has recently outsourced its payroll process to a third-party service provider. An
audit team was scheduled to audit payroll controls in the annual audit plan prepared prior to the
outsourcing. What action should the audit team take, considering a. Rectangle. the outsourcing
decision?
A. Cancel the engagement, because the processing is being performed outside the
organization.
B. Review only the controls over payments to the third-party provider based on the contract
C. Review only the company’s controls over data sent to and received from the third-party
service
D. Review the controls over payroll processing in both the company and the third-party
service
