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NEW QUESTION # 123
Which of the following risk management activities is most appropriate for an internal auditor to undertake?
- A. Implement risk responses on management's behalf.
- B. Review the management of key risks.
- C. Coordinate risk management activities.
- D. Impose risk management processes.
Answer: B
NEW QUESTION # 124
Which of the following is an example of a management control technique?
- A. A budget.
- B. A risk assessment.
- C. The board of directors.
- D. The control environment.
Answer: A
NEW QUESTION # 125
In which of the following scenarios would a customer service hotline receive a high volume of complaints regarding payments not being applied to customers' accounts?
- A. The customer service department is not forwarding complaints to the accounts receivable department.
- B. Invoices are not being mailed to customers.
- C. An employee is tampering with customer checks.
- D. Employees are submitting fraudulent expense reports.
Answer: C
NEW QUESTION # 126
According to The IIA's Code of Ethics, which of the following actions violates the principle of confidentiality?
- A. Accepting a consulting request in the IT department without possessing the requisite experience.
- B. Providing personal tax preparation services for a fee for several employees during the lunch hour.
- C. Agreeing to reword an observation to avoid the client complaining directly to the auditor's supervisor.
- D. Providing a friend with the marketing strategic plan, which she will use to prepare her university thesis.
Answer: D
NEW QUESTION # 127
Which of the following is an example of a transaction-level control?
- A. Tone at the top.
- B. Human resource policies.
- C. Inventory counts.
- D. Reconciliations of primary accounts.
Answer: D
NEW QUESTION # 128
Which of the following is a requirement for an assurance engagement that may not be for a consulting engagement?
- A. The internal audit activity must ensure management actions have been implemented effectively or risk accepted.
- B. The scope and objective of the engagement is agreed upon based on the engagement client's needs.
- C. Auditors cannot participate in an assurance engagement of a function for which they previously performed a consulting engagement.
- D. The internal audit activity has to ensure team members' objectivity is not impaired.
Answer: C
NEW QUESTION # 129
Which of the following statements is true regarding the use of non-statistical sampling in auditing control tests?
- A. Lesser evidence is required to support a conclusion than for statistical sampling.
- B. Non-statistical sample results must be projected to the population.
- C. Sampling risk will be accurately quantified through non-statistical sampling.
- D. It considers tolerable deviation rate more effectively than does statistical sampling.
Answer: B
NEW QUESTION # 130
Which of the following best demonstrates the authority of the internal audit activity?
- A. Improving the integrity of information.
- B. Determining the scope of internal audit services.
- C. Suggesting alternatives to decision makers.
- D. Achieving engagement objectives.
Answer: B
NEW QUESTION # 131
Which of the following decisions made during the testing phase of a compliance audit requires the most judgment by an internal auditor?
- A. Which fields to examine on each invoice.
- B. Which sampling methodology to select for testing.
- C. Whether an individual expenditure is allowable.
- D. What level of noncompliance is acceptable.
Answer: D
NEW QUESTION # 132
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. Proficiency.
- B. Due professional care.
- C. Independence.
- D. Objectivity.
Answer: B
NEW QUESTION # 133
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 have direct and unrestricted access to personnel and information throughout the organization and the governing board.
- C. Internal auditors should undergo annual performance appraisals conducted by the chief audit executive, who reports administratively to the chief financial officer.
- D. Internal auditors should rotate to other areas of the organization for nonaudit assignments to gain an understanding of the organization's operations.
Answer: D
NEW QUESTION # 134
The management at a national consumer goods organization implements a fair work and pay practice as well as a policy to treat employees equitably and consistently. Which common characteristics of fraud will the practice and policy most likely reduce?
- A. Rationalization.
- B. Opportunity.
- C. Commitment.
- D. Pressure or incentive.
Answer: D
NEW QUESTION # 135
Which of the following are generally recognized as essential elements of a corporate social responsibility program?
- A. Human rights and the environment.
- B. Fair operating practices and government regulation.
- C. Consumer issues and return on investment.
- D. Organizational governance and financial reporting.
Answer: A
NEW QUESTION # 136
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. 2, 3, and 4
- B. 1, 2, and 4
- C. 1, 3, and 4
- D. 1, 2, and 3
Answer: B
NEW QUESTION # 137
An internal auditor who is carrying out an engagement to review controls related to corporate tax reporting must possess which of the following competencies?
1. Proficiency in analyzing key IT risks and controls.
2. The ability to recognize significant deviations from good business practices.
3. Knowledge of key indicators of fraud in tax reporting.
4. The ability to recognize the existence of problems related to tax accounting.
- A. 3 and 4 only.
- B. 2, 3, and 4 only.
- C. 1 and 4 only.
- D. 1,2, 3, and 4.
Answer: A
NEW QUESTION # 138
Which of the following statements is true about The IIA Global Internal Audit Competency Framework?
- A. The core competencies outlined in the framework are not expected of a person undertaking an entry-level position as an internal auditor.
- B. The framework lists the core competencies internal auditors should possess before attempting to attain The IIA's Certified Internal Auditor certification.
- C. The framework is designed to be used primarily by chief audit executives that are developing indicators to measure the performance of the internal audit activity for which they are responsible.
- D. The framework describes competencies needed for individual internal auditors, but not those necessary at the chief audit executive level.
Answer: C
NEW QUESTION # 139
Which of the following would provide the best evidence of errors in the quantities of items received from suppliers?
- A. Warehouse receiving logs.
- B. Suppliers' reports of over shipments.
- C. Purchase requisitions and purchase orders.
- D. Observation and inspection of inventory.
Answer: A
NEW QUESTION # 140
According to the IIA guidance, who is responsible for periodically assessing the internal audit activity?
- A. The board.
- B. The external auditors.
- C. The chief audit executive.
- D. Senior management.
Answer: C
NEW QUESTION # 141
During an audit, the client questions the internal audit activity's authority to perform procedures over fraud allegations. According to HA guidance, which of the following would provide the most relevant support to respond to the client's concerns?
- A. Internal audit charter.
- B. The IIA's Code of Ethics.
- C. MA Standards.
- D. Definition of Internal Auditing.
Answer: A
NEW QUESTION # 142
According to IIA guidance, which of the following external groups is most likely to represent a liability risk, based on activities associated with the organization's corporate social responsibility program?
- A. Investors.
- B. Suppliers.
- C. Activists.
- D. Consumers.
Answer: C
NEW QUESTION # 143
An internal auditor wants to sample data to test an audit theory in a cost-effective way. Which of the following sampling strategies should she use?
- A. Nonstatistical sampling only
- B. Statistical sampling only
- C. Neither approach to testing the audit theory would be cost effective.
- D. A combination of both statistical and nonstatistical sampling.
Answer: A
NEW QUESTION # 144
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 chief audit executive (CAE).
- B. Approve the annual budget and resource plan for the internal audit activity.
- C. Assist the CAE with hiring objective and competent internal audit staff.
- D. Encourage the CAE to communicate and coordinate with the external auditor.
Answer: A
NEW QUESTION # 145
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 perform a manual recalculation of several results to validate and document the results.
- B. The auditor should tabulate the results in the spreadsheet to ensure the macro has generated the correct results for all calculations.
- C. The auditor should accept the calculations generated by the function, as any further work or documentation would be inefficient.
- D. The auditor should review the programming of the macro before its use to ensure that it is appropriate for the required calculations.
Answer: A
NEW QUESTION # 146
An assurance mapping exercise helps an organization do which of the following?
1. Provide assurance to stakeholders that risks are managed and reported, and regulatory and legal obligations are met.
2. Fulfill best practices in the industry.
3. Identify and address any gaps in the risk management process.
4. Identify fraud.
- A. 3 and 4.
- B. 1 and 3.
- C. 2 and 3.
- D. 1 and 4.
Answer: B
NEW QUESTION # 147
Given the highly technical and legal nature of privacy issues, which of the following statements best describes the internal audit activity's responsibility with regard to assessing an organization's privacy framework?
- A. If an organization does not have a mature privacy framework, the internal audit activity should assist in developing and implementing an appropriate privacy framework.
- B. The internal audit activity should have appropriate knowledge and competence to conduct an asses .......framework.
- C. The internal audit activity may delegate to nonaudit IT specialists the responsibility of determining whether personal information has been secured adequately and data protection controls are sufficient.
- D. Because the audit committee is ultimately responsible for ensuring that appropriate control processes are in place to mitigate risks associated with personal information, the internal audit activity is C. required to conduct privacy assessments.
Answer: B
NEW QUESTION # 148
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