Exam 4: Conducting the Internal Audit Engagement

An auditor prepared a workpaper that consisted of a list of employee names and identification numbers as well as the following statement: "A statistical sample of 40 employee personnel files was selected to verify that they contain all documents required by company policy 501 (copy attached). No exceptions were noted." The auditor did not place any audit verification symbols on this workpaper. Which of the following changes would most improve the auditor's workpaper?

According to the Standards, which of the following is an attribute when applied to the observations and recommendations contained in the audit report?

When performing a compliance audit of the organization's outsourced services, which of the following is considered the primary engagement objective?

The most effective method of reporting engagement results to management and stimulating action is to:

When conducting research, which of the following is most important?

Which of the following documents should the chief audit executive review and approve? 1. Workpaper retention policy. 2. Audit committee meeting minutes. 3. Internal audit handbook. 4. Quarterly financial statements.

An audit of customer accounts receivable found that outstanding receivables as a percentage of revenue had increased significantly during the past two years. The increase was attributed to the extension of credit, at the urging of the marketing department, to a number of companies that were not credit worthy. Which of the following would be least useful in monitoring the disposition of this finding?

If an auditor is sampling to test compliance with a particular company policy, which of the following factors should not affect the allowable level of sampling risk?

Which of the following would be included in an internal audit department's quality assurance and improvement program? 1. Ongoing internal assessments of the performance of the internal audit department. 2. Periodic internal reviews through self-assessments. 3. Assessments conducted by a qualified external reviewer at least once every five years.

During an audit of a branch bank, an internal auditor learned that a series of system failures had resulted in a four-day delay in processing customers' scheduled payroll direct deposits. The first failure was that of a disk drive, followed by software and other minor failures. Which of the following controls should the auditor recommend to avoid similar delays in processing?

An internal auditor is reviewing purchases made through the organization's corporate credit card program. Which of the following statements best describes a root cause of a deficiency?

Which of the following statements is correct regarding the assessment of risk in the annual audit planning process? 1. Activities requested by management should be considered higher risk than those requested by the audit committee. 2. Activities with lower budgets can be as high risk as those with higher budgets. 3. The potential financial or adverse exposure should always be considered in the assessment of risk.

When determining the nature, timing, and extent of follow up, the chief audit executive considers all of the following factors except:

In response to an accounts receivable confirmation, a customer indicated that the invoice listed on the confirmation letter had been paid two months earlier. This may indicate that:

The chief audit executive (CAE) notes during review of the final report of an assurance engagement that management has decided to accept the risks of two significant exposures identified by the audit. Which of the following actions by the CAE would be least prudent in these circumstances?

According to IIA guidance, which of the following are acceptable strategies for an internal audit activity (IAA) to establish or build relationships?

Which of the following is the most important concept to be included in a consulting engagement agreement?

According to the International Professional Practices Framework, the internal audit activity's decision to defer follow-up of recommendations and management's corrective actions until the next scheduled engagement for the area is justified when:

What is the primary reason for having audit management approve audit engagement reports?

According to IIA guidance, which of the following factors should the auditor in charge consider when determining the resource requirements for an audit engagement?