INTERNAL AUDIT EXECUTIVE WRITTEN

INTERVIEW QUESTIONS

Date: 31st August 2023

INSTRUCTION TO CANDIDATES.

1) Time allowed is 1:00 hour

2) This interview has two sections A and B, all questions in both sections are compulsory.

3) Please do not write your names on the answer script, use an identification/registration number

given to you by HRD before start of this interview.

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INTERVIEW QUESTIONS

SECTION A: CIRCLE THE MOST CORRECT ANSWER.

1. During an audit of the accounts receivable (AR) process, an internal auditor noted that
reconciliations are still not performed regularly by the AR staff, a recommendation that was
made following a previous audit. Monitoring by the financial reporting function has failed to
detect the shortcoming. Both the financial reporting function and AR report to the controller,
who is responsible for implementing action plans.
Which of the following supports the internal auditor's decision to combine both observations
into one reported finding?
A. The observation relates to the same control activity within a common process.
B. The observation has a common control, and it was noted in a prior audit.
C. The observation has a common process, and the action plan for the observation has a
common owner.
D. The observation was made during the same audit, and the action plan has a common
owner.
2. Roofings Group Chief Executive Officer (CEO) has requested that the Group Internal Audit
Manager (GIAM) coordinate the establishment of an Enterprise Risk Management (ERM)
program for the organization. Which of the following would be the most appropriate action for
the GIAM?
A. Decline the request as this role compromises the GIAM objectivity.
B. Accept the request after consulting with the board and adhering to proper safeguards.
C. Decline the request as internal audit has limited knowledge and experience of risk at the
enterprise level to undertake the assignment.
D. Accept the request as the role of coordinating ERM is a core function of internal audit.

3. You the newly recruited Internal Audit Executive has been asked by the Audit Manager to
conduct an investigation involving a suspected fraud. According to the Standards, which of the
following statements regarding the investigation process is false?
A. The auditor should not limit the collection of information by prejudging its relevance to
the investigation.

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B. The auditor must give consideration to the risk of unidentified co-conspirators whether
indications exist or not.
C. The auditor must consider the risk that audit procedures may inadvertently violate the
rights of the suspect.
D. The auditor should use anonymous surveys of co-workers to assess the character and
behaviour of the suspect.

4. Which of the following statements is false regarding roles and responsibilities pertaining to risk
management and control?
A. The Group Internal Audit Manager is responsible for overseeing the evaluation risk
management and control processes.
B. Internal auditors provide assurance about risk management and control process
effectiveness.
C. Operating managers are responsible for assessing risks and controls in their
departments.
D. Senior management is charged with overseeing the establishment risk management
and control processes.
5. An internal auditor wants to determine whether employees are complying with the information
security policy, which prohibits leaving sensitive information on employee desks overnight. The
auditor checked a sample of 90 desks and found eight that contained sensitive information.
How should this observation be reported if the organization tolerates 4 percent
noncompliance?
A. The matter does not need to be reported, because the noncompliant findings fall within
the acceptable tolerance limit.
B. The deviations are within the acceptable tolerance limit, so the matter only needs to be
reported to the information security manager.
C. The incidents of noncompliance exceed the tolerance level and should be included in
the final engagement report.

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INTERVIEW QUESTIONS

D. The incidents of noncompliance fall outside the acceptable tolerance limit and require
immediate corrective action, as opposed to reporting.
6. Which of the following actions should the audit committee take to promote organizational
independence for the internal audit activity?
A. Delegate final approval of the risk-based internal audit plan to the Group Internal Audit
Manager (GIAM).
B. Approve the annual budget and resource plan for the internal audit activity.
C. Assist the GIAM with hiring objective and competent internal audit staff.
D. Encourage the GIAM to communicate and coordinate with the external auditor.
7. While auditing the organization's credit limit approval process, an internal auditor learns that
the organization has made a large loan to co - auditor's relative. Which course of action should
the auditor take?
A. Proceed with the audit engagement, but do not include the relative's information.
B. Have the Group Internal Audit Manager and management determine whether the
auditor should continue with the audit engagement.
C. Disclose in the engagement final communication that the relative is a customer.
D. Immediately withdraw from the audit engagement.
8. In order to provide the most useful information for an organization's risk management
decisions, which of the following should be assessed?
A. Risk levels for future events based on the degree of uncertainty of those events and their
cost of mitigation.
B. Inherent and control risks and their impact on the extent of financial misstatements.
C. Risk levels of current and future events, their effect on the achievement of the
organization's objectives, and their underlying causes.
D. Risk levels of current and future events, their impact on the organization's mission, and
the potential for the elimination of existing risk factors.
9. According to the Standards, the organizational status of the internal audit activity:
A. Must be sufficient to permit the accomplishment of its audit responsibilities.
B. Is best when the reporting relationship is direct to the board of directors.

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INTERVIEW QUESTIONS

C. Requires the board's annual approval of the audit schedules, plans, and budgets.
D. Is guaranteed when the charter specifically defines its independence.
10. Which of the following measurements could an auditor use in an audit of the efficiency of a
motor vehicle inspection facility?
A. The total number of cars approved.
B. The ratio of cars rejected to total cars inspected.
C. The number of cars inspected per inspection agent.
D. The average amount of fees collected per cashier.
11. The Group Internal Audit Manager (GIAM) is the overall head of Internal Audit Department. As
per the standard, should periodically report the internal audit activity's purpose, authority,
responsibility, and performance, as well as significant risk exposures and control issues, to
which of the following?
I. Board of directors.
II. Senior management.
III. Shareholders.
IV. External auditors.
A. II only
B. I and II only
C. I, II, and III only
D. I, III, and IV only
12. Which of the following steps would not be included in a program of selecting and developing
human resources for an internal audit department?
A. Scheduling periodic meetings with individual auditors, during which the Audit Manager
provides counsel regarding each auditor's performance and professional career
development.
B. Establishing an internal review team to assess the auditors' and audit department's
compliance with standards, level of audit effectiveness, and compliance with
departmental policy.
C. Developing specific job descriptions for audit staff, audit managers, and other auditing
positions.
D. Establishing in-house training programs and requiring continuing education for audit
staff.
13. Which of the following best describes the underlying premise of the COSO enterprise risk
management framework?
A. Management should set objectives before assessing risk.
B. Every entity exists to provide value for its stakeholders.
C. Policies are established to ensure that risk responses are performed effectively.
D. Enterprise risk management can minimize the impact and likelihood of unanticipated
events.

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INTERVIEW QUESTIONS

14. Which of the following is a role of the board of directors in the governance process?
A. Conduct periodic assessments of the organization's governance systems.
B. Obtain assurance concerning the effectiveness of the organization's governance
systems.
C. Implement an effective system of internal controls to support the organization's
governance systems.
D. Review and approve operational goals and objectives.
15. Which of the following is not an appropriate type of coordination between the internal audit
activity and regulatory auditors?
A. Regulatory auditors share their perspective on risk management, control, and
governance with the internal auditors.
B. Internal auditors perform fieldwork at the direction of the regulatory auditors.
C. Internal auditors review copies of regulatory reports in planning related internal
engagements.
D. Regulatory and internal auditors exchange information about planned activities.
(Each Correct answer cycled is 2 marks = 30 marks)

SECTION B: STRUCTURED QUESTIONS:

Question 16.
Roofings Rolling Mills Ltd has a well-established Internal Audit department having qualified
Auditors/accountants who have taken some time without attending a Continue Professional
Development (CPD) course which is supposed to help them in refreshing or equip them with new
developments in the Profession.

Required:
You as a new knowledgeable Internal Audit Executive, have been tasked by the Audit Manager to make
a presentation to your colleagues in internal audit department on the four (4) fundamental ethical
principles of internal Auditor in line with the IIA Code of Ethics as a refresher training.
(04 marks)

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Question 17
The following information relates to bank transactions of RRM Superstore 10 for the month of
September 2022. The cashbook (bank column) had a debit balance Ugx. 160,054,000 while the bank
statement had credit balance Ugx. 245,641,000 as of 30th September 2022. On further examination, the
cashier discovered the following discrepancies:

1. On 12th September, a payment to RRM Superstore 10 from Muko Hardware by direct deposit
Ugx.3,500,000 was not cleared by the bank due to insufficient funds on the latter’s account. The
bank fined Muko Hardware Ugx. 250,000.
2. On 15th September, koma Hardware made a direct transfer Ugx. 16,300,000 to RRM Superstore 10
bank account. This information had not yet been reflected in the cashbook of RRM Superstore 10
by 30th September.
3. On 20th September, a customer paid Muto Traders Ugx. 4,360,000 by cheque. The bank erroneously
credited this payment to RRM Superstore 10 account.
4. A cash deposit Ugx. 1,282,000 by RRM Superstore 10 was entered, in error by the bank, as a credit
Ugx. 1,228,000.
5. RRM Superstore 10 paid Siro Traders by cheque Ugx. 12,460,000 but recorded it as a credit Ugx.
11,460,000 in the cashbook.
6. On 22nd September, Tundo Hardware made a direct credit transfer Ugx. 5,140,000 to RRM
Superstore 10 bank account. The cashbook had not been updated with this payment by 30th Sept.
7. The following cheques were deposited in the bank by RRM Superstore 10 on 29th Sept. but were
not reflected on the bank statement: No. 2132 Ugx. 7,450,000; No. 0345 Ugx. 4,000,000; No. 3340
Ugx. 5,600,000 and No. 4770 Ugx. 6,700,000.
8. A cheque payment Ugx. 7,600,000 by Gabula Hardware to RRM Superstore 10 account was
debited by the bank as Ugx. 6,700,000.
9. Cheques: No. 00105 Ugx. 25,300,000; No. 00106 Ugx. 35,200,000; No. 00107 Ugx. 27,346,000;
No. 00109 Ugx. 5,000,000 and No: 00110 Ugx. 2,390,000, paid to clients on 30th September were
not reflected on the bank statement.
10. Other transactions during the period that were reflected in the bank statement but not in the
cashbook were as follows:
Item Ugx. ‘000’
Bank charges 245
Ledger fees 25
Insurance payments 190
Loan deductions 545
Interest on deposit 250
Dividend income 6,500
Excise duty 90

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 INTERNAL AUDIT EXECUTIVE WRITTEN
INTERVIEW QUESTIONS

11. Matooke who provides meals to staff was paid by cheque No: 00106 Ugx. 1,500,000 on 23rd
September. He returned it on 29th September and was given cash of the same amount. This
payment had initially been captured in the cashbook (bank column).

Required:
You the newly recruited Internal Audit Executive have been assigned by the Audit Manager to prepare,
for RRM Superstore 10 as at 30th September, 2022 as a substantive Audit procedure:

(i) An adjusted cashbook (08 marks)

(ii) (ii) A bank reconciliation statement (08 marks)
(Total Section B 20 marks)