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NEW QUESTION 72
Which of the following best ensures an internal audit activity has the ability to render impartial and unbiased assessments?
- A. Supervision of the chief audit executive (CAE) by senior management.
- B. Organizational knowledge and skills.
- C. Organizational status and objectivity.
- D. CAE certification.
Answer: C
NEW QUESTION 73
According to the Standards, for how long should internal auditors who have previously performed or had management responsibility for an operation wait to become involved in future internal audit activity with that same operation?
- A. Six months.
- B. Two years.
- C. Three months.
- D. One year.
Answer: D
NEW QUESTION 74
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. 3 and 4.
- B. 1 and 3.
- C. 1 and 2.
- D. 2 and 3.
Answer: D
NEW QUESTION 75
According to the COSO enterprise risk management (ERM) framework, which of the following is not part of the new paradigm in ERM?
- A. Aligning risk appetite and strategy.
- B. Enhancing risk response decisions.
- C. Assessing the risk factors.
- D. Reducing operational surprises and losses.
Answer: C
NEW QUESTION 76
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 an external provider with the necessary knowledge and skills to perform the engagement.
- B. Do not accept the assignment because the internal audit activity lacks the competency to perform the engagement with due professional care.
- C. Accept the assignment and use control self-assessment to complete the project.
- 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: A
NEW QUESTION 77
Allegations have been made that an organization's share price has been manipulated.
Which of the following would provide an internal auditor with the most objective evidence in this case?
- A. Former financial consultants.
- B. Former members of management.
- C. Large customers of the organization.
- D. Major shareholders of the organization.
Answer: A
NEW QUESTION 78
Which of the following types of fraud includes embezzlement?
- A. Fraudulent statements.
- B. Corruption.
- C. Misappropriation of assets.
- D. Bribery.
Answer: C
NEW QUESTION 79
An internal audit charter should do which of the following?
- A. Communicate the internal audit activity's goals.
- B. Establish the size of the internal audit activity.
- C. Outline the schedule of future audits.
- D. Define the scope of internal audit activities.
Answer: D
NEW QUESTION 80
Which of the following is the most common way that occupational fraud is detected?
- A. Internal audits.
- B. Key controls.
- C. Whistleblower hotline.
- D. External audits.
Answer: C
NEW QUESTION 81
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 notify the organization's audit committee.
- B. Give the prize to a friend or family member and review the organization's ethics policy.
- C. Consult with an immediate supervisor and review the organization's ethics policy.
- D. Give the prize to a friend or family member and notitfy the organization's audit committee.
Answer: C
NEW QUESTION 82
Which of the following best describes the assessment of risks?
- A. Assess the amount of risk an organization can accept while pursuing its objectives.
- B. Assess the actions necessary to reduce the likelihood and/or impact of risk to tolerable levels.
- C. Assess alternative strategies to reduce or eliminate major risks.
- D. Assess the likelihood and/or impact of risk on the achievement of organizational objectives.
Answer: D
NEW QUESTION 83
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. 2, 3, and 4 only.
- B. 1,2, 3, and 4.
- C. 3 and 4 only.
- D. 1 and 4 only.
Answer: C
NEW QUESTION 84
According to the COSO enterprise risk management framework, which of the following best describes the activity that helps ensure risk responses are carried out effectively?
- A. Objective setting.
- B. Control activities.
- C. Event identification.
- D. Information and communication.
Answer: B
NEW QUESTION 85
Why is it important for the chief audit executive to periodically review the audit charter and present the results to senior management and the board?
- A. Because changes in the organization may impair the internal audit activity's ability to meet its objectives.
- B. Because management requires the review to measure effectiveness of the internal audit activity.
- C. So that there is assurance of the internal audit staff's proficiency to complete audit activities.
- D. So that the individual objectivity of the internal audit staff can be more clearly established.
Answer: A
NEW QUESTION 86
According to IIA guidance, which of the following is an area in which the internal auditor should be proficient?
- A. Fundamentals of accounting, economics, and finance.
- B. Internal audit standards, procedures, and techniques.
- C. Management principles.
- D. Computerized information systems.
Answer: B
NEW QUESTION 87
Which of the following is an example of a risk management avoidance response?
- A. Recalling a product.
- B. Obtaining product insurance.
- C. Outsourcing production.
- D. Exiting a marketplace.
Answer: D
NEW QUESTION 88
A medical insurance provider uses an electronic claims-submission process and suspects that a number of physicians have submitted claims for treatments that were not performed. Which of the following control procedures would be most effective to detect this type of fraud?
- A. Develop an integrated test facility and submit false claims to verify that the system is detecting such claims on a consistent basis.
- B. Require the physician to submit a signed statement attesting that the treatments had been performed.
- C. Send confirmations to the physicians, requesting them to verify the exact nature of the claims submitted to the insurance provider.
- D. Use computer software to identify abnormal claims based on the insured's age and medical history.
Answer: D
NEW QUESTION 89
Which of the following is an example of a management control technique?
- A. The control environment.
- B. A risk assessment.
- C. A budget.
- D. The board of directors.
Answer: C
NEW QUESTION 90
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 91
An internal auditor for a large retail chain suspects that a store manager has been stealing money from cash sales by listing the sales as accounts receivable and then writing off the accounts as bad debts. Which of the following irregularities is the most likely cause of the auditor's suspicion?
- A. A much higher percentage of past-due accounts receivable than that of previous years.
- B. A much higher percentage of past-due accounts receivable than that of other stores.
- C. A much higher bad debt expense as a percentage of sales than that of other stores.
- D. A much higher bad debt expense as a percentage of sales than that of previous years.
Answer: C
NEW QUESTION 92
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. 1.2. 4. and 5 only.
- B. 4 and 5 only.
- C. 1.2, and 3 only.
- D. 2. 3. 4. and 5 only.
Answer: A
NEW QUESTION 93
What is the additional advantage of facilitated workshops, in comparison with structured interviews, used when testing the effectiveness of entity-level controls?
- A. Facilitated workshops create a synergy of discussion that can bring multiple perspectives to the same issue.
- B. During facilitated workshops, people more openly say things to internal auditors than during private interviews.
- C. The testimonial evidence obtained during facilitated workshops is generally considered more reliable.
- D. Internal auditors do not need other sources of information, as the data gathered during facilitated workshops is sufficient.
Answer: A
NEW QUESTION 94
Which of the following activities should the chief audit executive perform to ensure compliance with an organization's code of conduct?
- A. Review and adjudicate all violations of the code of conduct.
- B. Act as an adviser to the committee responsible for reviewing violations of the code.
- C. Lead the committee responsible for the oversight of the code.
- D. Implement a system of procedures to inform all employees of the code.
Answer: B
NEW QUESTION 95
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. 2 and 3.
- C. 1 and 2.
- D. 1 and 3.
Answer: D
NEW QUESTION 96
An organization has implemented a new automated payroll system that contains a table of pay rates that are matched to employee job classifications. Which control should an internal auditor suggest in order to ensure that the table is updated correctly, and is used only for valid pay changes?
- A. Require a supervisor in the department, who has the ability to change the table, to compare the changes to a signed management authorization.
- B. Restrict data-table access from management and line supervisors who have the authority to determine pay rates.
- C. Require a manager, who is independent of the system and who cannot change the table, to authorize and sign-off on any employee pay changes.
- D. Ensure that adequate edit and reasonableness checks are built into the automated system.
Answer: C
NEW QUESTION 97
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