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NEW QUESTION # 154
In the area of business acumen, which of the following competencies would be the sole responsibility of an internal audit staff member?
- A. Assessing how IT contributes to organization objectives, risks, and relevance to audit.
- B. Maintaining industry-specific knowledge appropriate to the organization.
- C. Understanding regulatory and legal framework and assessing its relevance.
- D. Maintaining technical aspects of accounting standards and reporting processes.
Answer: C
NEW QUESTION # 155
Reviewing prior audit reports and supporting workpapers before an engagement starts enables an internal auditor to do which of the following?
1. To understand better the activity and processes that will be audited.
2. To identify the audit procedures that will be used during the engagement.
3. To ensure that matters of greatest vulnerability will be addressed.
4. To use the information obtained as evidence in the current engagement.
- A. 1 and 4 only
- B. 2, 3, and 4 only
- C. 4 only
- D. 1 and 3 only
Answer: D
NEW QUESTION # 156
A furniture manufacturer has installed a new fire sprinkler system at its central warehouse and canceled the existing fire insurance policy on that property. What change of risk response strategy does this course of action most likely reflect?
- A. From acceptance to reduction.
- B. From sharing to reduction.
- C. From sharing to avoidance.
- D. From acceptance to avoidance.
Answer: B
NEW QUESTION # 157
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. Management principles.
- C. Computerized information systems.
- D. Internal audit standards, procedures, and techniques.
Answer: D
NEW QUESTION # 158
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. Search for gaps in check numbers.
- B. Review raw material purchase quantities.
- C. Check inventory levels.
- D. Compare vendor summaries.
Answer: C
NEW QUESTION # 159
Which of the following does not need to be defined in the internal audit charter?
- A. The scope of internal audit activities.
- B. The audit engagements to be performed during the upcoming year.
- C. The internal audit activity's position within the organization.
- D. Management and the board of directors' agreement regarding the roles and responsibilities of the internal audit activity.
Answer: B
NEW QUESTION # 160
According to the Standards, which of the following is not a consideration when exercising due professional care for an assurance engagement?
- A. The relative complexity, materiality, or significance of matters to which assurance procedures are applied.
- B. The probability of significant errors, irregularities or instances of noncompliance.
- C. The cost of providing the assurance services in relation to potential benefits.
- D. The extent of assurance services necessary to ensure that all risks are identified.
Answer: D
NEW QUESTION # 161
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. Business acumen.
- D. Performance management.
Answer: D
NEW QUESTION # 162
Which of the following is an example of a transaction-level control?
- A. Reconciliations of primary accounts.
- B. Tone at the top.
- C. Human resource policies.
- D. Inventory counts.
Answer: A
NEW QUESTION # 163
A government agency's policy states that board members' travel and hospitality expenses must be audited annually. Which of following people or groups is most appropriate to perform this audit?
- A. The internal audit activity.
- B. The agency's chief compliance officer.
- C. The government's independent auditor.
- D. The external auditors from an accounting firm.
Answer: C
NEW QUESTION # 164
Which of the following statements best explains why internal auditors map processes?
1. To obtain audit evidence to support auditor's observations.
2. To determine scope and objectives of the audit.
3. To facilitate the identification of ownership and responsibility for key risks.
4. To identify potential efficiency improvements.
- A. 1 and 3.
- B. 3 and 4.
- C. 1 and 2.
- D. 2 and 4.
Answer: B
NEW QUESTION # 165
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. Compensating control.
- B. Detective control.
- C. Preventive control.
- D. Corrective control.
Answer: C
NEW QUESTION # 166
According to IIA guidance, which of the following is ultimately responsible for seeing that the internal control system of an organization's social responsibility program is effective?
- A. Internal audit activity.
- B. All employees.
- C. Board of directors.
- D. Senior management.
Answer: C
NEW QUESTION # 167
The chief audit executive (CAE) has assigned an internal auditor to an upcoming engagement. Which of the following requirements would most likely indicate that the internal auditor was assigned to an assurance engagement?
- A. The CAE must personally obtain the needed skills, knowledge, or other competencies if the internal auditor does not have them.
- B. The assigned internal auditor must not assume management responsibilities while performing the engagement.
- C. The assigned internal auditor must maintain objectivity while performing the engagement.
- D. The assigned internal auditor must determine the objectives, scope, and techniques of the engagement.
Answer: D
NEW QUESTION # 168
An internal auditor in a small broadcasting organization was assigned to review the revenue collection process.
The auditor discovered that some checks from three customers were never recorded in the organization's financial records. Which of the following documents would be the least useful for the auditor to verify the finding?
- A. Copies of deposit slips.
- B. Customer confirmation letters.
- C. Bank statements.
- D. Copies of sales invoices.
Answer: A
NEW QUESTION # 169
According to COSO, which of the following is not considered one of the components of an organization's internal environment?
- A. Authority and responsibility to resolve issues.
- B. Framework to plan, execute and monitor activities.
- C. Knowledge and skills needed to perform activities.
- D. Integrated responses to multiple risks.
Answer: D
NEW QUESTION # 170
A chief audit executive (CAE) is selecting an internal audit team to perform an audit engagement that requires a high level of knowledge in the areas of finance, investment portfolio management, and taxation. If neither the CAE nor the existing internal audit staff possess the required knowledge, which of the following actions should the CAE take?
- A. Select the most experienced auditors in the department to perform the engagement.
- B. Ask the audit committee to decide the course of action.
- C. Postpone the audit until the CAE hires internal audit staff with the required knowledge.
- D. Hire consultants who possess the required knowledge to perform the engagement.
Answer: D
NEW QUESTION # 171
Which of the following describes a key characteristic related to effective organizational communication?
- A. Comprehensive supervisory and verification procedures.
- B. A culture of integrity and transparency.
- C. Unique operating environments with varying complexity.
- D. A well-designed system of internal controls.
Answer: D
NEW QUESTION # 172
Which of the following is a valid statement about the use of visual observations during an audit engagement?
1. Visual observations can be used to detect ineffective controls, idle resources, and safety hazards.
2. Visual observations can be used during both preliminary survey and fieldwork stages of the audit engagement.
3. Visual observations can provide unsubstantiated facts to management if the internal auditor believes the information is useful.
4. Visual observations can assist an auditor in determining if a material observation should be communicated through informal means to the organization's senior management.
- A. 1 and 4 only
- B. 3 and 4 only
- C. 2 and 3 only
- D. 1 and 2 only
Answer: D
NEW QUESTION # 173
What type of risk management strategy is being employed when an organization installs two firewalls to provide protection from unauthorized access to the network?
- A. Avoiding the risk of having a direct network connection to un-trusted networks.
- B. Diversifying the risk that network access will not be available to legitimate, authorized users.
- C. Accepting the risk that there may be attempts at unauthorized access to the network.
- D. Sharing the risk that either firewall could be compromised by hackers.
Answer: B
NEW QUESTION # 174
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