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NEW QUESTION 1
To fill a critical vacancy, an internal auditor is assigned temporarily to a nonaudit role in the purchasing department, where she worked previously before joining the internal audit activity. According to IIA guidance, which of the following statements is true regarding these circumstances?
- A. The chief audit executive (CAE) should review all work performed by the auditor during her temporary assignment to ensure no impairments.
- B. The CAE may conduct audits in the purchasing department during the auditor's temporary assignment.
- C. The auditor should obtain the CAE's approval as to the nature and scope of the duties she is permitted to perform during her temporary assignment.
- D. Any work performed by the auditor during her temporary assignment must conform to the internal audit charter.
Answer: C
NEW QUESTION 2
Management is developing and implementing a risk and control framework for use throughout the organization. Which of the following elements should be included in the organization's control framework?
* 1. Appropriate levels of authority and responsibility.
* 2. Supervision of staff and appropriate review of work.
* 3. The seniority of management in the organization.
* 4. The ability to trace each transaction to an accountable and responsible individual.
- A. 1,2, and 3.
- B. 1.2, and 4.
- C. 1.3, and 4.
- D. 2, 3, and 4.
Answer: D
NEW QUESTION 3
While preparing for an audit of senior management expenses, the chief audit executive (CAE) learns that management is unable to locate a number of original expense claims to support the related disbursements. She decides to defer the engagement until they can be located. Which of the following principles likely guided the CAE's decision?
- A. Objectivity.
- B. Proficiency.
- C. Independence.
- D. Due professional care.
Answer: D
NEW QUESTION 4
Which of the following is a requirement for an assurance engagement that may not be for a consulting engagement?
- A. The internal audit activity has to ensure team members' objectivity is not impaired.
- B. Auditors cannot participate in an assurance engagement of a function for which they previously performed a consulting engagement.
- C. The scope and objective of the engagement is agreed upon based on the engagement client's needs.
- D. The internal audit activity must ensure management actions have been implemented effectively or risk accepted.
Answer: B
NEW QUESTION 5
An internal auditor in a small broadcasting organization was assigned to review the revenue collection process. The auditor discovered that some checks from three customers were never recorded in the organization's financial records. Which of the following documents would be the least useful for the auditor to verify the finding?
- A. Bank statements.
- B. Customer confirmation letters.
- C. Copies of sales invoices.
- D. Copies of deposit slips.
Answer: D
NEW QUESTION 6
Upon joining the internal audit activity, each new auditor receives a copy of the audit handbook. Which of the following handbook policies has the greatest risk of compromising audit objectivity?
- A. Internal auditors should obtain 80 hours of continuing professional education every two years, 20 of which should be audit-related, and the remainder may be operations-related.
- B. Internal auditors should rotate to other areas of the organization for nonaudit assignments to gain an understanding of the organization's operations.
- C. Internal auditors should have direct and unrestricted access to personnel and information throughout the organization and the governing board.
- D. Internal auditors should undergo annual performance appraisals conducted by the chief audit executive, who reports administratively to the chief financial officer.
Answer: B
NEW QUESTION 7
An internal auditor uses a predefined macro provided in a popular spreadsheet application to verify the present value of the organization's investments. Which of the following is the most appropriate course of action regarding the auditor's use of this functionality?
- A. The auditor should accept the calculations generated by the function, as any further work or documentation would be inefficient.
- B. The auditor should perform a manual recalculation of several results to validate and document the results.
- C. The auditor should review the programming of the macro before its use to ensure that it is appropriate for the required calculations.
- D. The auditor should tabulate the results in the spreadsheet to ensure the macro has generated the correct results for all calculations.
Answer: B
NEW QUESTION 8
Which of the following is an example of collusion?
- A. An employee includes a faked receipt in his expense claim, and the claim is signed by the employee's manager.
- B. A vendor inflates the price of an item and remits a portion of the excess to the purchasing manager.
- C. A vendor sends a duplicate invoice with a new invoice number, and the accounts payable system fails to detect the duplication.
- D. An employee works with the IT manager to develop a program for identifying duplicate invoice payments.
Answer: B
NEW QUESTION 9
Forty-five percent of an organization's customer payments are submitted online. Eight percent of online payments are rejected. Executive management decides to outsource its online payment services to a contractor that will assume 75 percent of the total value of rejected payments. The organization estimates $1.25 million customer payments due during the contract period.
Which of the following represents the organization's residual risk for online customer payments due?
- A. $11, 250
- B. $25, 000
- C. $33, 750
- D. $45, 000
Answer: A
NEW QUESTION 10
Which of the following is an activity that an internal auditor must not perform?
- A. Establish and provide continuing assurance on an anti-money laundering program for new hires.
- B. Survey employees for their understanding of anti-money laundering practices.
- C. Provide assurance for the effectiveness of anti-money laundering training.
- D. Assess the risk of being fined for ineffective anti-money laundering practices.
Answer: A
NEW QUESTION 11
According to The IIA's Code of Ethics, which of the following statements is true?
- A. When an internal auditor releases required information to a regulator, resulting in a significant loss through fines and penalties for the organization, he fails to add value.
- B. When an internal auditor limits the scope of the audit engagement after learning that management is hiding relevant information, he demonstrates integrity.
- C. When an internal auditor disagrees with the treatment received by workers in the organization's foreign subsidiary and alters the audit program to highlight the issue, he fails to demonstrate objectivity.
- D. When an internal auditor continues with an audit engagement, despite the audit client's claims that the work performed is unnecessary and redundant he fails to demonstrate competency.
Answer: C
NEW QUESTION 12
According to IIA guidance, which of the following should be formally documented in the internal audit charter?
- A. The internal audit activity's responsibility for imposing risk management processes.
- B. The internal audit activity's responsibility for the organization's governance framework.
- C. The nature of consulting services provided by the internal audit activity.
- D. The budgeting process for the internal audit activity.
Answer: C
NEW QUESTION 13
According to IIA guidance, which of the following should be included in the internal audit charter?
- A. The minimum resources and competencies needed for the internal audit activity.
- B. Identification of the organizational units where engagements are to be performed.
- C. Organizational relationships and reporting lines.
- D. Assigned responsibilities for designing and implementing controls.
Answer: C
NEW QUESTION 14
According to the COSO internal control framework, which of the following best describes the use of continuous auditing programs by the internal audit activity?
- A. Control environment.
- B. Control activities.
- C. Risk assessment.
- D. Monitoring.
Answer: D
NEW QUESTION 15
In which of the following scenarios would the chief audit executive (CAE) be required to decline the assignment?
- A. The CAE would need to procure external services to deliver the internal audit assurance program.
- B. There is no expertise within the internal audit team for detecting and investigating fraud.
- C. There is no expertise within the internal audit team for auditing an IT engagement.
- D. There is no available expertise on the internal audit team to perform a consulting engagement.
Answer: B
NEW QUESTION 16
Which of the following would be considered a violation of The IIA's mandatory guidance on independence?
- A. The chief audit executive (CAE) reports functionally to the board and administratively to the chief financial officer.
- B. The board seeks senior management's recommendation before approving the annual salary adjustment of the CAE.
- C. The CAE confirms to the board, at least once every five years, the organizational independence of the internal audit activity.
- D. The CAE updates the internal audit charter and presents it to the board for approval periodically, not on a specific timeline.
Answer: B
NEW QUESTION 17
An internal auditor needs to recommend a policy element to be included in an organization's code of ethics. Which of the following recommendations would be most effective?
- A. Ethics should vary with local customs in the organization's foreign operations.
- B. Whistleblowing should be discouraged because it can cause distrust among employees.
- C. Ethical behavior should be incorporated into performance evaluations.
- D. Senior management should be granted specific exemptions to the code of ethics.
Answer: C
NEW QUESTION 18
According to IIA guidance, which of the following best describes internal auditors' responsibility regarding fraud?
- A. Internal auditors should take a leading role in investigating all fraud-related cases.
- B. Internal auditors must have sufficient knowledge to evaluate the risk of fraud.
- C. Internal auditors should report all fraud cases to law enforcement agents, in accordance with the Code of Ethics.
- D. Internal auditors are responsible for ensuring that fraud does not occur.
Answer: B
NEW QUESTION 19
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