Exam 4: Conducting the Internal Audit Engagement

Which of the following procedures would be most helpful in providing additional evidence when an auditor suspects that an unidentified employee is submitting and approving invoices for payment?

Which of the following would be most helpful to a governmental auditor searching for the existence of multiple welfare claims that were filed under different names but used the same address?

According to the Standards, which of the following would least likely be considered a red flag when evaluating the risk for fraud?

Information gathered in a forensic investigation of business fraud is usually gathered with which of the following standards in mind?

When determining if appropriate resources exist to achieve engagement objectives, which of the following factors should a chief audit executive consider? 1. Nature and complexity of the audit engagement. 2. Time constraints. 3. Effectiveness of the audit committee. 4. Availability of resources for the engagement.

During an interview with a manager in a company's claims department, an auditor noted that the manager became nervous and changed the subject whenever the auditor raised questions about certain types of claims. The manager's answers were consistent with company policies and procedures. When documenting the interview, the auditor should:

During a payroll audit of a large organization, an internal auditor noted that the assistant personnel director is responsible for many aspects of the computerized payroll system, including adding new employees in the system; entering direct-deposit information for employees; approving and entering all payroll changes; and providing training for system users. After discussions with the director of personnel, the auditor concluded that the director was not comfortable dealing with information technology issues and felt obliged to support all actions taken by the assistant director. The auditor should:

An airline contracted with an external service provider to perform maintenance on all aircraft ground support equipment. Management then asked the internal audit activity (IAA) to evaluate the controls in place that would permit appropriate oversight of the service provider in maintaining required maintenance standards. According to the International Professional Practices Framework, which of the following would be the most appropriate course of action for the IAA to undertake to establish the engagement objectives?

An organization has adopted an enterprise-wide risk management process and has appointed a chief risk officer (CRO) to manage the process. The board has requested that the audit committee have oversight over the risk management function. Which of the following statements is not true regarding this situation?

In preparing to facilitate a control self-assessment session, an auditor would be least likely to ensure that:

An auditor used a questionnaire during an interview to gather information about the nature of credit sales processing. The questionnaire did not cover some pertinent information offered by the person being interviewed, and the auditor did not document the potential problems for further investigation. The primary deficiency with the above process is that:

Which of the following types of sampling techniques should an internal auditor use when testing the effectiveness of internal controls?

Which of the following events would most likely cause the chief audit executive to consider changing the current year's audit plan? 1. The government announced that new regulatory requirements will be introduced in the coming years which may significantly impact the organization's primary product. 2. A major competitor unexpectedly introduced a new model at a lower price point to compete with the organization's market leading product. 3. The organization announced a new joint venture with a long time corporate partner to introduce a new product with development costs and sales beginning next fiscal year. 4. An equal joint venture partner filed a lawsuit against the organization and requested that the court issue an immediate suspension of future product shipments.

An organization does not have a formal risk management function. According to the Standards, which of the following are conditions where the internal audit activity (IAA) may provide risk management consulting? 1. There is a clear strategy and timeline to migrate risk management responsibility back to management. 2. The IAA has the final approval on any risk management decisions. 3. The IAA does not give objective assurance on any part of the risk management framework for which it is responsible. 4. The nature of services provided to the organization is documented in the internal audit charter.

According to the Standards, which of the following is least important in determining the adequacy of an annual audit plan?

If participants in a control self-assessment workshop begin breaking their agreed-upon ground rules, the facilitator should:

A company's policy requires that all customers be treated in a fair and consistent manner. Which of the following audit procedures would provide the most persuasive evidence that the policy was followed?

An audit of an organization's claims department determined that a large number of duplicate payments had been issued due to problems in the claims processing system. During the exit conference, the vice president of the claims department informed the auditors that attempts to recover the duplicate payments would be initiated immediately and that the claims processing system would be enhanced within six months to correct the problems. Based on this response, the chief audit executive should:

Which of the following is the most appropriate step for the chief audit executive to take in order to avoid defamation of character of the principal suspect in a fraud investigation?

An auditor decides to perform an inventory turnover analysis for both raw materials inventory and finished goods inventory. The analysis would be potentially useful in: