A goal of governance practices is:

A. Increasing compensation of senior managers and directors.

B. Creating an effective control environment to manage risk.

C. Reporting fully to stakeholders unless the result is impairment of organizational interests.

D.Satisfying generally accepted business norms.

Organizational culture is reflected in which of the following?

Measuring performance

Specifying accountability

Complying with corporate social responsibilities

A.II and III only.

B.I and II only.

C.I, II, and III.

D.I only.

Which of the following statements about organizational governance is true?

A.The dilution of shareholders wealth from stock options or bonuses is a governance issue.

B.The internal auditor has more responsibility than the board for organizational governance.

C.The compensation of management is a governance process.

D.Governance functions are internal but not external.

The board of directors of a corporation is not responsible for

A.Selecting and removing officers.

B.Coordinating audit activities.

C.Electing or removing directors.

D.Setting management compensation.

Corporate governance most likely involves relationships with

A.External but not internal stakeholders.

B.Employees.

C.Corporate charters and bylaws.

D.Competitors.

Which of the following statements regarding oversight as a component of governance is false?

A.Oversight includes internal and external assurance activities.

B.Oversight is the governance component with which internal auditing is most concerned.

C.Oversight determines the overall objectives.

D.Risk management activities are performed by senior management and risk owners.

In the governance structure, risk owners

A.Identify stakeholders and unacceptable outcomes.

B.Carry out board directives.

C.Are responsible for day-to-day operations.

D.Are senior managers.

Which of the following is best defined as a governance principle?

A.Appointing a risk committee.

B.Developing a business model.

C.Drafting compensation policies for senior management.

D.Creating corporate charters and bylaws.

Which of the following most likely should be considered in the internal audit activity’s planning for the assessment of governance?

A.The compliance of the organization with the internal audit activity’s definition of governance.

B.Whether all material decisions have been authorized by the board.

C.The ways in which control and risk are unrelated.

D.Relying on the assessment of internal control in other audits.

Which of the following is considered a potential stakeholder of an entity?

A.Shareholders.

B.Suppliers.

C.Employees.

D.All of the answers are correct.

The highest level governing body in an organization is least likely to have a duty to

A.Manage risk through a subcommittee.

B.Periodically assess the ethical climate.

C.Declare dividends.

D.Repeal bylaws.

applies to all organizational activities. Thus, its processes provide overall direction for activities. activities are a key element of risk management.

List A

List B

List C

A.

List A Governance

List B Risk management

List C Internal control

B.

List A Risk management

List B Governance

List C Internal control

C.

List A Internal control

List B Risk management

List C Governance

D.

List A Risk management

List B Internal control

List C Governance

Which of the following is most likely an internal audit activity’s function in a less structured governance process?

A.Evaluating the effectiveness of specific governance processes that are distinct from control.

B.Designing processes to address basic risks.

C.Compliance with procedures, policies, and plans.

D.Acting as a consultant in optimizing governance practices.

The responsibility of the internal audit activity in an assurance engagement for ethics-related matters is

A.To evaluate the design and effectiveness of the organization’s ethics-related activities.

B.To promote and set the example of ethical behavior.

C.To establish and maintain sound ethics-related objectives and programs.

D.To oversee the organization’s ethical climate.

Senior management is primarily responsible for

A.Evaluating the controls over the reliability and integrity of financial and operational information.

B. Determining who will be risk owners.

C. Ensuring that external auditors oversee risk management and control processes.

D. Implementing and monitoring controls designed by the board of directors.

Ensuring effective organizational performance management and accountability is most directly the proper function of

A.A quality assurance program.

B.Governance.

C.Control.

D.Risk management.

What are the elements of the oversight component of governance?

The business model

Limits of organizational conduct

External assurance

Internal auditing

A.1, 2, 3, and 4.

B.1, 2, and 4 only.

C.3 and 4 only.

D.2 and 4 only.

According to COSO, culture is

A. The behavior expected within the organization.

B. The combination of processes and structures within the organization.

C. A reflection of the organization’s mission and vision and consists of the attitudes, behaviors, and understanding about risk.

D. The attitude and actions of the board and management regarding the importance of control within the organization.

Which of the following is not a goal of corporate governance?

A. Maximizing executive compensation.

B. Complying with society’s legal and regulatory rules.

C. Reporting fully and truthfully to stakeholders.

D. Providing an overall benefit to society.

The board as defined by The IIA

A. Ordinarily is a supervisory group appointed by senior managers.

B.May be the head of the organization.

C. Establish reporting requirements for risk owners.

D. Performs day-to-day governance functions.