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NEW QUESTION 94
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. 2 and 3.
• C. 3 and 4.
• D. 1 and 3.

Answer: D

 

NEW QUESTION 95
An employee who recently transferred into the internal audit activity has been assigned to audit the accounts payable system.
Which function, if previously performed by the auditor, would represent a conflict of interest?

• A. Signing timekeeping cards for subordinates.
• B. Reviewing shipping documents for accuracy.
• C. Monitoring the allowance for doubtful accounts.
• D. Writing procedures for the handling of duplicate payments.

Answer: D

Explanation:
Section: Volume A

 

NEW QUESTION 96
Which of the following risk factors is most subjective?

• A. Competency of operating management.
• B. Size of the unit being audited.
• C. Changes in staff, systems, or the environment.
• D. Prior audit findings.

Answer: A

Explanation:
Section: Volume C

 

NEW QUESTION 97
According to IIA guidance, which of the following are considerations of due professional care when an internal auditor conducts a formal consulting engagement?
1. The complexity of the work required.
2. The needs and expectations of the client.
3. The potential value of the engagement compared to the effort.
4. Information regarding assumptions and procedures to be employed.

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

Answer: A

 

NEW QUESTION 98
Which of the following is a benefit from reduced testing during a particular phase of an audit engagement?

• A. The level of planned audit risk is lowered.
• B. The size of the internal audit activity can be reduced.
• C. There is less concern about assessing inherent risk.
• D. Additional audit hours are available for pursuing other engagement objectives.

Answer: D

 

NEW QUESTION 99
During an audit engagement, an internal auditor finds that management is not complying with previous commitments made to the external auditors. However, the auditor determines management's actions to be justified due to significant changes in the business. The best course of action for the auditor to take would be to:

• A. Compare the recommended changes against the changes made by management and advise management which action to take.
• B. Inform the external auditors and seek their guidance.
• C. Proceed with the audit engagement and assess the changes actually implemented by management.
• D. Inform the external auditors and remove the associated work from the internal audit scope.

Answer: C

 

NEW QUESTION 100
According to IIA guidance, which of the following statements regarding the internal audit charter is true?

• A. Senior management should approve the charter before it is submitted to the board.
• B. The charter should define the consulting services that the internal audit activity is permitted to perform.
• C. The CEO periodically should assess whether the terms of the charter continue to be adequate.
• D. The charter should describe the purpose and authority of the internal audit activity, consistent with the Standards.

Answer: A

Explanation:
Section: Volume E

 

NEW QUESTION 101
Suspecting fraud, the chief financial officer (CFO) asked the internal audit activity to investigate a significant increase in travel related expenditures. Work was performed by a qualified internal auditor. Following the completion of the engagement, the chief audit executive (CAE) reported to the CFO that no violations were found and no fraud had occurred.
According to the Standards, which of the following principles did the CAE violate?

• A. Proficiency.
• B. Individual objectivity.
• C. Organizational independence.
• D. Due professional care.

Answer: D

 

NEW QUESTION 102
Which of the following would be the most useful in developing an annual audit plan?

• A. Flowcharting and data capture software.
• B. Voting software and hardware.
• C. General purpose audit software.
• D. Risk assessment software.

Answer: D

Explanation:
Section: Volume A
Explanation

 

NEW QUESTION 103
Which of the following internal control weaknesses would an internal auditor most likely detect while reviewing a flowchart that depicts the purchasing function of an organization?

• A. Payments for goods received have not been authorized at the appropriate level.
• B. The organization is not taking advantage of quantity discounts available from its suppliers.
• C. Payments to suppliers are made before goods are received.
• D. Purchasing policies have not been updated.

Answer: C

Explanation:
Section: Volume C

 

NEW QUESTION 104
Which type of objectives can best be described as broad goals that promote the effective andefficient use of resources?

• A. Reporting objectives.
• B. Strategic objectives.
• C. Operational objectives.
• D. Compliance objectives.

Answer: C

 

NEW QUESTION 105
An internal auditor has been engaged to assess fraud risks associated with a new financial software system. Which competency would best help the auditor complete the task?

• A. Knowledge of key management and business principles.
• B. A thorough understanding of organizational governance principles.
• C. Proficiency in creating and utilizing process maps.
• D. Expertise in identifying information technology risks.

Answer: D

 

NEW QUESTION 106
In publicly held companies, management often requires the internal audit activity's involvement with quarterly financial statements that are made public and used internally. Which of the following is generally not a reason for such involvement?

• A. Management may perceive that having quarterly financial information examined by the internal auditors enhances its value for internal decision making.
• B. The Standards state that internal auditors should be involved with reviewing quarterly financial statements.
• C. Management may be concerned about its reputation in the financial markets.
• D. Management may be concerned about potential penalties that could occur if quarterly financial statements are misstated.

Answer: B

Explanation:
Section: Volume A

 

NEW QUESTION 107
According to the International Professional Practices Framework, which of the following is the appropriate division of responsibilities for the coordination of internal and external audit efforts?
I. Oversight of Work Coordination of Activities Chief audit executive Senior management
II. Board Chief audit executive
III.
Chief financial officer
Chief audit executive
IV.
Board
Chief financial officer

• A. I
• B. IV.
• C. III.
• D. II.

Answer: D

 

NEW QUESTION 108
During a review of a division's operations, an internal auditor notes that sales and customer base are unchanged, while inventory and gross margin have increased significantly. Which of the following audit procedures would be most relevant in substantiating management's assertion that the gross margin increase is due to increased efficiency in manufacturing operations?

• A. Obtain a physical count of inventory.
• B. Select a sample of finished goods inventory and trace raw materials cost back to purchase prices in order to determine the accuracy of the recorded raw materials price.
• C. Take a physical inventory of equipment to determine if there were significant changes.
• D. For a sample of products, compare costs-per-unit this year to those of last year, test cost build-ups, and analyze standard cost variances.

Answer: D

 

NEW QUESTION 109
During an audit of a major contract, an internal auditor finds that actual hours and dollars billed are consistently at or near budgeted amounts. This condition is a red flag for which of the following procurement fraud schemes?

• A. Cost mischarging.
• B. Bid rotation.
• C. Defective pricing.
• D. Fictitious vendor.

Answer: A

 

NEW QUESTION 110
According to IIA guidance, which of the following statements regarding the internal audit charter is true?

• A. Senior management should approve the charter before it is submitted to the board.
• B. The charter should define the consulting services that the internal audit activity is permitted to perform.
• C. The CEO periodically should assess whether the terms of the charter continue to be adequate.
• D. The charter should describe the purpose and authority of the internal audit activity, consistent with the Standards.

Answer: A

 

NEW QUESTION 111
Risk within an internal audit engagement is defined as the:

• A. Failure to accomplish established objectives and goals for operations or programs.
• B. Probability that a balance or class of transactions and related assertions contain misstatements that could be material to the financial statements.
• C. Failure to adhere to organizational policies, plans, and procedures, or the failure to comply with relevant laws and regulations.
• D. Uncertainty of an event occurring that could have an impact on the achievement of objectives.

Answer: D

 

NEW QUESTION 112
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