Exam 3: The Internal Audit Activity Role in Governance, Risk, and Control

While performing an internal audit engagement, an auditor reviews a flowchart of the organization's purchasing function. Which of the following internal control weaknesses would the auditor be able to identify in the chart?

Which of the following best describes an appropriate form of working paper standardization?

To promote a positive image within an organization, a chief audit executive (CAE) adjusted the audit plan to focus on assurance engagements that highlighted potential costs to be saved. Negative observations were to be omitted from engagement final communications. Which action taken by the CAE would be considered a violation of the Standards?

To assure that the technical proficiency of internal auditors is appropriate for the audit engagements to be performed, a chief audit executive should:

An internal auditor obtains spreadsheets created by the finance department of an organization. The internal auditor contacts a third party about the source data that was utilized to create the spreadsheets before going on to perform a ratio analysis and a comparison of budget versus actual data. What is the most likely reason that the internal auditor involved a third party before performing further analysis?

A company has entered into a $20, 000, 000 fixed-price contract with a general contractor for the construction of a new retail outlet. For this contract, which of the following would represent the greatest risk?

Which of the following would be considered a preventive control?

A manufacturing organization discovers that the waste water released has failed to meet permitted limits. Which control function will be least effective in correcting the issue?

Which of the following would be most effective in determining if the percentage of medication orders containing errors improved after a hospital installed a computerized medication-tracking system?

An internal auditor for a large computer company suspects that returned computer systems are being repackaged as new products and shipped to other customers before the defects have been repaired. Which of the following would be the most persuasive piece of evidence in support of the auditor's suspicions?

What conclusion can be reached by comparing a random sample of vendor invoices to purchase orders?

Which of the following would not be considered part of preliminary survey of an engagement area?

When comparing an organization's current performance to that of the prior year, an internal auditor found that: Total labor costs had increased. More overtime costs had been incurred. The total number of workers had increased. Net income was 10 percent lower. Based solely on this information, which of the following is a valid conclusion?

When developing the annual audit plan and reviewing risk assessment priorities, a chief audit executive should always identify the:

An internal auditor is testing the controls of a large and complex food production process where quality assurance is critical. Management provides process charts and documentation, but the auditor quickly determines that this information is incomplete and out of date. Which of the following would be the most appropriate course of action for the auditor to follow?

Which of the following factors is not likely to affect the level of inherent risk associated with an application system?

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 large trucking organization wants to reduce traffic accidents by improving its system of internal controls. Which of the following controls is correctly classified? 1. Review of speeding violations to identify repetitive locations and drivers is an example of a preventive control. 2. Defensive driver training is an example of a directive control. 3. The installation of tracking devices in delivery vehicles is an example of a corrective control. 4. Providing a vehicle driver handbook is an example of a detective control.

Which of the following is least likely to enhance the independence of an internal audit activity?

According to IIA guidance, which of the following statements is true?