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NEW QUESTION # 31
Which of the following best ensures an internal audit activity has the ability to render impartial and unbiased assessments?

• A. CAE certification.
• B. Supervision of the chief audit executive (CAE) by senior management.
• C. Organizational knowledge and skills.
• D. Organizational status and objectivity.

Answer: D

NEW QUESTION # 32
Which of the following would most likely be considered a red flag for fraud?

• A. An employee in charge of payroll disbursements has rotated these duties with several colleagues.
• B. An organization lacks a whistleblower hotline for reporting suspicious activity.
• C. An employee with significant personal debt is in charge of handling large wire transfers for the organization.
• D. A senior manager has been delegating the authority to sign-off on small dollar amount purchases to a subordinate.

Answer: C

NEW QUESTION # 33
During an internal audit, an organization's processing department is found to have incidences of both duplicate invoices and notices from customers that purchased goods were not received. The department under review insists that some of these reports are false and that others were isolated oversights due to understaffing.
Which of the following tests would best help the internal auditor detect fraudulent activity?

• A. Compare vendor summaries.
• B. Search for gaps in check numbers.
• C. Check inventory levels.
• D. Review raw material purchase quantities.

Answer: C

NEW QUESTION # 34
Which of the following is most likely to enhance an internal auditor's objectivity?

• A. An auditor is unrestricted in determination of scope.
• B. An auditor performs his work free from interference.
• C. An auditor avoids conflicts of interest.
• D. An auditor is appropriately able to communicate results.

Answer: C

NEW QUESTION # 35
A large sales organization maintains a system of internal control according to the COSO model and has updated its code of conduct. This change relates to which component of the COSO framework?

• A. Information and communication.
• B. Control activities.
• C. Control environment.
• D. Commitment.

Answer: C

NEW QUESTION # 36
Which of the following conditions is the most likely indicator of fraud?

• A. Lower earnings occur during the industry's down cycle.
• B. Departmental reports are consistently issued in an untimely manner.
• C. A manager regularly assumes subordinates' duties.
• D. Commissions are paid based on verified increases to sales.

Answer: C

NEW QUESTION # 37
According to IIA guidance, which of the following is the best example of a system application control?

• A. An input control over data integrity.
• B. A physical security control over a data center.
• C. A system development life cycle control.
• D. A program change management control.

Answer: A

NEW QUESTION # 38
Management has asked the chief audit executive (CAE) to provide assurance on the organization's automated control system related to financial data. The current audit staff does not have the expertise needed to conduct this type of engagement. Which of the following would be the best response by the CAE?

• A. Accept the assignment and use control self-assessment to complete the project.
• B. Accept the assignment and use an external provider with the necessary knowledge and skills to perform the engagement.
• C. Do not accept the assignment because the internal audit activity lacks the competency to perform the engagement with due professional care.
• D. Accept the assignment if the engagement is included in the current audit plan, but inform senior management that the current audit staff does not have the knowledge and skills required.

Answer: B

NEW QUESTION # 39
A credit card company detects potential errors in credit card numbers by checking whether all entered numbers contain the correct amount of digits. This is an example of which of the following IT controls?

• A. Logic test.
• B. Check digits.
• C. Data integrity tests.
• D. Balancing control activities.

Answer: A

NEW QUESTION # 40
According to IIA guidance, which of the following statements is true when an internal auditor performs consulting services that improve an organization's operations?

• A. The services must be aligned with those defined in the internal audit charter.
• B. The services must not be performed by the same internal auditor who performed assurance services, in order to maintain objectivity.
• C. The services may preclude assurance services from the consulting engagement.
• D. The services impose no responsibility to communicate information other than to the engagement client.

Answer: B

NEW QUESTION # 41
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. 1 and 4.
• B. 3 and 4.
• C. 1 and 3.
• D. 2 and 3.

Answer: C

NEW QUESTION # 42
While auditing an organization's credit approval process, an internal auditor learns that the organization has made a large loan to another auditor's relative. Which course of action should the auditor take?

• A. Disclose in the engagement final communication that the relative is a customer.
• B. Immediately withdraw from the audit engagement.
• C. Proceed with the audit engagement, but do not include the relative's information.
• D. Have the chief audit executive and management determine whether the auditor should continue with the audit engagement.

Answer: D

NEW QUESTION # 43
While performing an accounts payable engagement, a senior auditor wants to conduct several tests of controls for travel expenses. Which of the following actions are most appropriate for the senior auditor to undertake?
1. Ensure all tests use a random sampling technique.
2. Consider a judgmental approach for the sample size.
3. Assess testing errors through root cause analysis.
4. Ensure that the entire data set is tested.

• A. 2 and 3.
• B. 2 and 4.
• C. 1 and 2.
• D. 1 and 3.

Answer: A

NEW QUESTION # 44
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 activities.
• B. Monitoring.
• C. Control environment.
• D. Risk assessment.

Answer: B

NEW QUESTION # 45
Sometimes, internal audit staff may partner with operating managers to rank risks. Which of the following outcomes may be the most beneficial aspects of this strategy?
1. Reappraising risks levels.
2. Providing accurate information to management.
3. Marketing the internal audit activity.
4. Planning safeguards for assets in high-risk areas.

• A. 3 and 4.
• B. 1 and 2.
• C. 1 and 3.
• D. 2 and 3.

Answer: C

NEW QUESTION # 46
According to IIA guidance, which of the following statements is true?

• A. Control process risks are found at multiple layers of the IT environment.
• B. Risks in IT processes are best mitigated by individual controls.
• C. IT risks and related controls are operational and best identified using a bottom-up approach.
• D. The overall focus of the framework is on significant controls in all critical IT applications.

Answer: A

NEW QUESTION # 47
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 is the same as for internal clients.
• D. The nature of assurance services for outside clients should be defined in the internal audit charter.

Answer: D

NEW QUESTION # 48
According to IIA guidance, which of the following best describes processes and tools typically used in ongoing internal assessments?

• A. Report of internal assessment results, response plans, and outcomes.
• B. Benchmarking of the internal audit activity's practices and performance.
• C. Analysis of performance metrics such as cycle times.
• D. Self-assessments and surveys of stakeholder groups.

Answer: C

NEW QUESTION # 49
Which segregation of duties would best reduce the risk of payroll fraud?

• A. Human resources personnel add employees, review and submit payroll hours to the payroll department for processing, and deliver paychecks to employees.
• B. Human resources personnel add employees, payroll personnel process hours, and human resources personnel deliver paychecks to employees.
• C. Human resources personnel add employees, and payroll personnel process hours and enter employee bank account numbers. Paychecks are automatically deposited in the employee's bank account.
• D. Human resources personnel add employees and enter employee bank information. Payroll personnel process hours, and paychecks are automatically deposited in the employee's bank account.

Answer: C

NEW QUESTION # 50
Which of the following is not a role of the internal audit activity in facilitating risk identification and evaluation?

• A. Providing assurance that risks are evaluated correctly.
• B. Evaluating risk management processes.
• C. Recommending accountability for risk management.
• D. Supporting managers to identify ways to mitigate risks.

Answer: C

NEW QUESTION # 51
An internal audit team is performing an audit of workplace accident claims.
Which of the following actions by the audit team best demonstrates due professional care?

• A. Reviewing claims to ensure all accidents actually occurred in the workplace.
• B. Having an occupational health officer on the engagement team.
• C. Determining that the claims have been classified properly.
• D. Placing reliance on medical reports from the injured worker's doctor.

Answer: B

NEW QUESTION # 52
Which of the following is an example of a transaction-level control?

• A. Inventory counts.
• B. Reconciliations of primary accounts.
• C. Human resource policies.
• D. Tone at the top.

Answer: B

NEW QUESTION # 53
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