The Purpose of the Internal Audit's Evaluation of the Effectiveness

question 54

Multiple Choice

The purpose of the internal audit's evaluation of the effectiveness of existing risk management processes is to determine that

• A) Management has planned and designed the process to provide reasonable assurance of achieving objectives and goals.
• B) Management directs processes to provide reasonable assurance of achieving objectives and goals.
• C) The organization's objectives and goals will be achieved efficiently and economically.
• D) The organization's objectives and goals will be achieved in an accurate and timely manner and with minimal use of resources.

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Definitions:

Inventory Costing Methods

Strategies used by companies to assign costs to inventory and to determine the cost of goods sold, including FIFO (First In, First Out), LIFO (Last In, First Out), and weighted average cost.

LIFO Method

An inventory valuation method that assumes the last items of inventory purchased are the first ones sold, potentially minimizing taxes in an inflationary period.

Purchase Order

A formal document issued by a buyer to a seller, detailing the products or services ordered and the agreed-upon price.

Periodic Inventory System

A system in which inventory levels are updated in the accounting records on a periodic basis, typically at the end of an accounting period.