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NEW QUESTION 140
An internal auditor is conducting an engagement in the accounts payable department, which includes expressing an opinion at the micro level. According to IIA guidance, which of the following statements is true regarding micro-level opinions?
1. They are most effective when using a combination of current and prior engagement findings to draw conclusions.
2. They typically are based on defined procedures such as those found in an accounts payable reconciliation process.
3. They are discrete and not normally shared with senior management or the board.
4. They can rely on evidence taken from the work of other assurance activities across the organization.
- A. 1 and 3.
- B. 2 and 3.
- C. 1 and 2.
- D. 3 and 4.
Answer: B
NEW QUESTION 141
During an internal audit, the internal auditor compares the employee turnover rate in the area being audited with the employee turnover rate in the organization as a whole.
This is an example of which of the following analytical auditing procedures?
- A. Benchmarking.
- B. Reasonableness test.
- C. Regression analysis.
- D. Trend analysis.
Answer: A
NEW QUESTION 142
According to the Standards, which of the following is not a consideration when exercising due professional care for an assurance engagement?
- A. The cost of providing the assurance services in relation to potential benefits.
- B. The extent of assurance services necessary to ensure that all risks are identified.
- C. The relative complexity, materiality, or significance of matters to which assurance procedures are applied.
- D. The probability of significant errors, irregularities or instances of noncompliance.
Answer: B
NEW QUESTION 143
A chief audit executive (CAE) is reviewing the internal audit activity's performance and is concerned that the average number of revisions to findings is steadily rising, making it increasingly difficult to trace the finding to the supporting evidence and workpapers. According to MA guidance, which of the following elements of the internal audit activity's quality assurance and improvement program would provide the CAE with the most helpful insight into the cause of this problem?
- A. The overall effectiveness of the internal audit activity's periodic self assessments.
- B. The adequacy of the day-to-day supervision and review process.
- C. The scope and frequency of external assessments.
- D. The type of audit productivity and performance statistics reported.
Answer: B
NEW QUESTION 144
When an internal auditor applies due professional care to perform an assurance engagement, which of the following must she consider?
1. Findings of the last audit engagement performed.
2. Probability of significant errors, irregularities, or noncompliance.
3. Extent of work needed to achieve engagement objectives.
4. Cost of the engagement versus the potential benefits.
- A. 1, 2, 3, and 4
- B. 2 and 3 only
- C. 2, 3, and 4 only
- D. 1 and 4 only
Answer: C
NEW QUESTION 145
Which of the following would be considered a violation of The IIA's mandatory guidance on independence?
- A. The CAE confirms to the board, at least once every five years, the organizational independence of the internal audit activity.
- B. The CAE updates the internal audit charter and presents it to the board for approval periodically, not on a specific timeline.
- C. The board seeks senior management's recommendation before approving the annual salary adjustment of the CAE.
- D. The chief audit executive (CAE) reports functionally to the board and administratively to the chief financial officer.
Answer: C
NEW QUESTION 146
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. It considers tolerable deviation rate more effectively than does statistical sampling.
- C. Sampling risk will be accurately quantified through non-statistical sampling.
- D. Non-statistical sample results must be projected to the population.
Answer: D
NEW QUESTION 147
If an engagement client disputes that a specific action or process is within the scope of the internal audit activity, what would be the most appropriate way for the internal audit activity (IAA) to respond?
- A. Terminate only the specific action or process with which the client disagrees and work to determine a substitute function that will not impede further IAA or the client-audit relationship.
- B. Terminate the audit engagement in full because an operational audit will not be productive without the client's cooperation.
- C. Seek the approval of senior management or the board in mediation, allowing an overseer to clarify the scope of the audit engagement for the client.
- D. Refer the client to the IAA's charter and the approved yearly audit plan, which includes the areas designated for audit in the current time period.
Answer: D
NEW QUESTION 148
A former line supervisor from the Financial Services Department has completed six months of a two-year development opportunity with the internal audit activity (IAA). She is assigned to a team that will audit the organization's payroll function, which is managed by the Human Resources Department. Which of the following statements is most relevant regarding her independence and objectivity with respect to the payroll audit?
- A. She may participate, but she must be supervised by the auditor in charge.
- B. She may participate for training purposes, to build her knowledge of the IAA.
- C. She may participate, but only after she has completed one year with the IAA.
- D. She may participate, because she did not previously work in the Human Resources Department.
Answer: D
NEW QUESTION 149
According to the IIA guidance, who is responsible for periodically assessing the internal audit activity?
- A. The external auditors.
- B. Senior management.
- C. The board.
- D. The chief audit executive.
Answer: D
NEW QUESTION 150
An internal auditor makes a series of observations when performing an analytical review of division operations. The auditor notes the following things: the current ratio is increasing and the quick ratio is decreasing, sales and current liabilities have remained constant, and the number of day sales in inventory is increasing. Which conclusion should the auditor draw from this data?
- A. The division produced fewer items this year than in prior years.
- B. Cash or accounts receivable has decreased.
- C. The gross margin has decreased.
- D. The gross margin has increased.
Answer: B
NEW QUESTION 151
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, 3, and 4
- B. 2 and 3 only
- C. 1, 2, and 3 only
- D. 1 and 4 only
Answer: C
NEW QUESTION 152
According to IIA guidance, which of the following statements about working papers is false?
- A. They assist in the implementation of recommendations.
- B. They contribute to development of the internal audit staff.
- C. They demonstrate compliance with auditing standards.
- D. They provide support for communication to third parties.
Answer: A
NEW QUESTION 153
A computer system automatically locks a user's account after three unsuccessful attempts to log on.
Which type of control does this scenario represent?
- A. Corrective control.
- B. Detective control.
- C. Compensating control.
- D. Preventive control.
Answer: D
NEW QUESTION 154
According to The IIA's Code of Ethics, which of the following actions violates the principle of confidentiality?
- A. Providing personal tax preparation services for a fee for several employees during the lunch hour.
- B. Accepting a consulting request in the IT department without possessing the requisite experience.
- 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 155
Which of the following offers the best evidence that the internal audit activity has achieved organizational independence?
- A. An independent third party has assessed the organization's system of internal controls to be adequate and effective.
- B. The internal audit charter is drafted properly and approved by the appropriate parties.
- C. The chief audit executive reports both functionally and administratively to the CEO.
- D. The mission statement and strategy of the internal audit activity demonstrates alignment to organizational objectives.
Answer: C
NEW QUESTION 156
According to the International Professional Practices Framework, which of the following are allowable activities for an internal auditor?
1. Advocating the establishment of a risk management function.
2. Identifying and evaluating significant risk exposures during audit engagements.
3. Developing a risk response for the organization if there is no chief risk officer.
4. Benchmarking risk management activities with other organizations.
5. Documenting risk mitigation strategies and techniques.
- A. 4 and 5 only.
- B. 1.2, and 3 only.
- C. 1.2. 4. and 5 only.
- D. 2. 3. 4. and 5 only.
Answer: C
NEW QUESTION 157
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 CAE may conduct audits in the purchasing department during the auditor's temporary assignment.
- B. The chief audit executive (CAE) should review all work performed by the auditor during her temporary assignment to ensure no impairments.
- C. Any work performed by the auditor during her temporary assignment must conform to the internal audit charter.
- D. 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.
Answer: D
NEW QUESTION 158
Which of the following is not one of the 10 core competencies identified in the IIA Competency Framework?
- A. Governance, risk, and control.
- B. Internal audit delivery.
- C. Performance management.
- D. Business acumen.
Answer: C
NEW QUESTION 159
While attending a conference, an internal auditor won an all-expense paid trip sponsored by a vendor of the internal auditor's organization.
Which of the following actions are most appropriate for the auditor to take?
- A. Consult with an immediate supervisor and review the organization's ethics policy.
- B. Give the prize to a friend or family member and notitfy the organization's audit committee.
- C. Give the prize to a friend or family member and review the organization's ethics policy.
- D. Consult with an immediate supervisor and notify the organization's audit committee.
Answer: A
NEW QUESTION 160
Which of the following is a weakness of observation as audit evidence?
- A. It cannot be used to test the occurrence assertion.
- B. It cannot be relied upon because the evidence is not persuasive.
- C. It cannot be used to test the completeness assertion.
- D. It cannot be used to test the existence assertion.
Answer: C
NEW QUESTION 161
Which of the following control methods is effective in reducing the risk of purchasing-scheme fraud?
1. Periodically reviewing the vendor list for unusual vendors and addresses.
2. Segregating duties for amount purchasing, receiving, shipping, and accounting.
3. Validating sequential integrity of purchase orders.
4. Verifying the validity of invoices with post office box addresses.
- A. 3 and 4 only
- B. 1, 2, 3, and 4
- C. 1 and 2 only
- D. 1, 2, and 4 only
Answer: A
NEW QUESTION 162
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