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NEW QUESTION 1
According to the HA Code of Ethics, which of the following statements best describes the principle of competency?
- A. Internal auditors shall perform their work with honesty, diligence, and responsibility.
- B. Internal auditors shall perform their work in accordance with the Standards.
- C. Internal auditors shall perform their work in accordance with the law and make disclosures expected by the law.
- D. Internal auditors shall be prudent in the use of information acquired while performing their work.
Answer: B
NEW QUESTION 2
Which of the following factors have the greatest influence on the independence of the internal audit activity?
- A. Quality assessments and cultural biases of the internal audit activity.
- B. Rotational assignments and familiarity of the internal audit activity.
- C. Employee incentives and self review of the internal audit activity.
- D. Organizational positioning and scope control of the internal audit activity.
Answer: D
NEW QUESTION 3
Which of the following is the most common way that occupational fraud is detected?
- A. Internal audits.
- B. Whistleblower hotline.
- C. Key controls.
- D. External audits.
Answer: B
NEW QUESTION 4
According to COSO, which of the following describes a principle related to the control environment?
- A. The organization identifies and assesses changes that could significantly impact the system of internal control.
- B. The organization establishes appropriate authorities and responsibilities in the pursuit of objectives.
- C. The organization selects and develops control activities that contribute to the mitigation of risks.
- D. The organization performs evaluations to ascertain whether internal control components are present and functioning.
Answer: B
NEW QUESTION 5
According to IIA guidance, which of the following must internal auditors consider to conform with the requirements for due professional care during a consulting engagement?
* 1. The cost of the engagement, as it pertains to audit time and expenses in relation to the potential benefits.
* 2. The needs and expectation of clients, including the nature, timing, and communication of engagement results.
* 3. The application of technology-based audit and other data analysis techniques, where appropriate.
* 4. The relative complexity and extent of work needed to achieve the engagement's objectives.
- A. 1, 2, and 3
- B. 1, 2, and 4
- C. 1, 3, and 4
- D. 2, 3, and 4
Answer: B
NEW QUESTION 6
An organization is facing a financial downturn and needs to impose major budget reductions to all departments. According to MA guidance, which of the following actions is most appropriate for the board to take to evaluate the potential impact on the internal audit activity?
- A. Ask management to determine which internal audit engagements are lower risk and could be considered for removal from the annual audit plan.
- B. Ask appropriate stakeholders for their opinion on the potential impacts of reducing the scope of the internal audit plan.
- C. Ask the chief audit executive to determine whether budgetary limitations impede the ability of the internal audit activity to execute its responsibilities.
- D. Ask The human resources department to determine how the annual compensation and salary of the audit staff could be adjusted to achieve savings.
Answer: C
NEW QUESTION 7
Which of the following statements describes impairment to the internal auditor's objectivity?
- A. An internal auditor reviews a purchasing agent's contract drafts prior to their execution.
- B. An internal auditor reduces the scope of an audit engagement due to budget restrictions.
- C. An internal auditor receives a promotional gift that is available to the organization's employees.
- D. An internal auditor performs an assessment of the operations for which he was recently responsible.
Answer: D
NEW QUESTION 8
Which of the following would not be considered part of preliminary survey of an engagement area?
- A. Interviews with individuals affected by the entity.
- B. Functional walk through test.
- C. Analytical reviews.
- D. Sampling scope.
Answer: D
NEW QUESTION 9
Which of the following is an example of a risk avoidance strategy?
- A. Hedging against exchange rate variations.
- B. Limiting access to an organization's data center.
- C. Selling a nonstrategic business unit.
- D. Outsourcing a high-risk activity.
Answer: C
NEW QUESTION 10
Evidence discovered during the course of an engagement suggests that multiple incidents of fraud have occurred. There do not appear to be sufficient controls in place to prevent reoccurrence. Which of the following is the internal auditor's most appropriate next step?
- A. Immediately notify management of the area under review and the other internal auditors involved in the engagement.
- B. Discuss the situation with the engagement supervisor to determine whether fraud investigation experts are required to investigate the matter properly.
- C. Fully document in the workpapers the evidence that has been discovered and recommend appropriate controls to address the fraud.
- D. Provide the evidence that was discovered to local law enforcement for possible prosecution of the suspected fraud.
Answer: A
NEW QUESTION 11
In which of the following functions would fraud be most likely to occur?
- A. Maintaining custody of inventory records.
- B. Collecting payments on accounts.
- C. Approving changes to employee records.
- D. Preparing customer statements.
Answer: B
NEW QUESTION 12
Which of the following statements is true regarding assurance services provided to clients outside of the organization?
- A. Assurance services for outside clients are not covered under the internal audit charter.
- B. Assurance services for outside clients must be approved on a case-by-case basis by the board of directors.
- C. The nature of assurance services for outside clients should be defined in the internal audit charter.
- D. The nature of assurance services for outside clients is the same as for internal clients.
Answer: C
NEW QUESTION 13
A large trucking organization wants to reduce traffic accidents by improving its system of internal controls. Which of the following controls is correctly classified?
* 1. Review of speeding violations to identify repetitive locations and drivers is an example of a preventive control.
* 2. Defensive driver training is an example of a directive control.
* 3. The installation of tracking devices in delivery vehicles is an example of a corrective control.
* 4. Providing a vehicle driver handbook is an example of a detective control.
- A. 1 and 2.
- B. 1 and 4.
- C. 2 and 3.
- D. 3 and 4.
Answer: A
NEW QUESTION 14
According to The IIA's Code of Ethics, which of the following is true?
- A. Confidentiality requires that auditors disclose all material facts known to them.
- B. Integrity requires that auditors perform internal audit services in accordance with the Standards.
- C. Objectivity requires that auditors perform their work with honesty, diligence, and responsibility.
- D. Confidentiality requires that auditors be prudent in the use and protection of client information.
Answer: D
NEW QUESTION 15
According to IIA guidance, which of the following roles would be appropriate for an internal auditor regarding fraud risk?
* 1. Identification.
* 2. Mitigation.
* 3. Remediation.
* 4. Reduction.
- A. 1 onl
- B. |
- C. 1 and 4 only.
- D. 1, 3, and 4 only.
- E. 1,2, 3, and 4.
Answer: B
NEW QUESTION 16
A medical insurance provider uses an electronic claims-submission process and suspects that a number of physicians have submitted claims for treatments that were not performed. Which of the following control procedures would be most effective to detect this type of fraud?
- A. Require the physician to submit a signed statement attesting that the treatments had been performed.
- B. Send confirmations to the physicians, requesting them to verify the exact nature of the claims submitted to the insurance provider.
- C. Develop an integrated test facility and submit false claims to verify that the system is detecting such claims on a consistent basis.
- D. Use computer software to identify abnormal claims based on the insured's age and medical history.
Answer: D
NEW QUESTION 17
A furniture manufacturer has installed a new fire sprinkler system at its central warehouse and canceled the existing fire insurance policy on that property. What change of risk response strategy does this course of action most likely reflect?
- A. From sharing to reduction.
- B. From acceptance to reduction.
- C. From sharing to avoidance.
- D. From acceptance to avoidance.
Answer: A
NEW QUESTION 18
According to COSO, which of the following is not considered one of the components of an organization's internal environment?
- A. Authority and responsibility to resolve issues.
- B. Framework to plan, execute and monitor activities.
- C. Integrated responses to multiple risks.
- D. Knowledge and skills needed to perform activities.
Answer: C
NEW QUESTION 19
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