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

An internal auditor is checking the accuracy of a computer-printed inventory listing to determine whether the total dollar value of inventory is significantly overstated. Because there is no time or resources to check all items in the warehouse, a sample of inventory items must be used. If the sample size is fixed, which of the following would be the most accurate sampling approach?

An auditor plans to analyze customer satisfaction, including. (1) customer complaints recorded by the customer service department during the last three months; (2) merchandise returned in the last three months; and (3) responses to a survey of customers who made purchases in the last three months. Which of the following statements regarding this audit approach is correct?

It would be appropriate for an internal audit activity to use consultants with expertise in health-care benefits when the internal audit activity is:

An internal auditor is reviewing employee travel data to identify opportunities to cut costs while ensuring adequate participation at conferences to support the organization's mission. Which of the following pieces of evidence would be sufficient for completing this task?

An internal audit manager of a furniture manufacturing organization is planning an audit of the procurement process for kiln-dried wood. The procurement department maintains six procurement officers to manage 24 different suppliers used by the organization. Which of the following controls would best mitigate the risk of employees receiving kickbacks from suppliers?

Which of the following would be the best source of information for a chief audit executive to use in planning future audit staff requirements?

A quantitative risk assessment model has all of the following advantages except:

What is audit risk?

If earnings on financial statements for internal use only have been manipulated in the past, an internal auditor is likely to focus on which of the following?

What role, if any, should the internal audit activity have in the process of following up on observations and recommendations made by the external auditors?

Which of the following activities most significantly increases the risk that a bank will make poor-quality loans to its customers?

An internal auditor is performing analytical reviews as part of an audit of a supermarket's merchandising department. Because the economy has declined since midyear, the auditor can expect to encounter which of the following?

Which of the following is a common type of payroll fraud?

Which of the following is correct regarding the implementation of a quality assurance and improvement program for the internal audit function?

Which of the following statements describes a control weakness?

Which type of control is designed to directly mitigate internal and external risks at the organization wide level, furthering the achievement of many overall organizational objectives?

Which of the following would provide the best evidence of compliance with an airline's standard of having aircraft refueled and cleaned within a specified time of arrival at an airport?

Which of the following best describes the trait that an internal auditor exercises when considering the extent of work needed to achieve the engagement's objectives?

During the planning phase of an audit of suspected overbilling on contracts for security services, an auditor should perform all of the following except:

An accounts receivable clerk receives cash payments, posts the payments to customer accounts, and prepares the daily cash deposit. The clerk has been stealing some cash and manipulating the customer payments to hide the theft. This fraud could be detected with which of the following controls?