Exam 4: Conducting the Internal Audit Engagement

A manufacturing process could create hazardous waste at several production stages, from raw materials handling to finished goods storage. If the objective of a pollution prevention audit engagement is to identify opportunities for minimizing waste, in what order should the following opportunities be considered?

The internal auditor of a bank has developed a multiple regression model which has been used for a number of years to estimate the amount of interest income from commercial loans. During the current year, the auditor applies the model and discovers that the R2 value has decreased dramatically, but that the model otherwise seems to be working correctly. Which of the following conclusions is justified by the change?

If the chief audit executive believes that senior management has accepted a level of residual risk that is unacceptable to the organization, they should:

A chief audit executive is preparing interview questions for the upcoming recruitment of a senior internal auditor. According to IIA guidance, which of the following attributes shows a candidate's ability to probe further when reviewing incidents that have the appearance of misbehavior?

Which of the following has the greatest effect on the efficiency of an audit?

With which of the following would the internal audit activity discuss findings, conclusions and recommendations prior to issuance of internal audit report? 1. Business unit management. 2. Chief audit executive. 3. Audit committee. 4. Chief executive officer.

Many questionnaires are made up of a series of different questions that use the same response categories (for example: strongly agree, agree, neither, disagree, strongly disagree). Some designs will have different groups of respondents answer alternate versions of the questionnaire that present the questions in different orders and reverse the orientation of the endpoints of the scale (for example: agree on the right and disagree on the left). The purpose of such questionnaire variations is to:

Which of the following data collection strategies systematically tests the effects of various factors on an outcome?

Which characteristic of risk assessment makes it a useful tool for audit planning?

A chief audit executive (CAE) received a detailed internal report of senior management's internal control assessment. Which of the following subsequent actions by the CAE would provide the greatest assurance over management's assertions?

Which of the following does not represent a difficulty in using red flags as fraud indicators?

An internal auditor wants to determine whether employees are complying with the information security policy, which prohibits leaving sensitive information on employee desks overnight. The auditor checked a sample of 90 desks and found eight that contained sensitive information. How should this observation be reported, if the organization tolerates 4 percent noncompliance?

A large investment organization hired a chief risk officer (CRO) to be responsible for the organization's risk management processes. Which of the following people should prioritize risks to be used for the audit plan?

According to IIA guidance, which of the following statements are true regarding the internal audit plan? 1. The audit plan is based on an assessment of risks to the organization. 2. The audit plan is designed to determine the effectiveness of the organization's risk management process. 3. The audit plan is developed by senior management of the organization. 4. The audit plan is aligned with the organization's goals.

Which of the following statements is false regarding roles and responsibilities pertaining to risk management and control?

Which of the following is a red flag associated with fictitious revenues?

Which of the following would provide the greatest assurance of the accuracy of a computer program's computation of freight charges for catalog sales?

According to IIA guidance, which of the following statements best justifies a chief audit executive's request for external consultants to complement internal audit activity (IAA) resources?

Which of the following would cause a company's accounts receivable turnover ratio to decrease steadily over a three-year period?

A manufacturer is under contract to produce and deliver a number of aircraft to a major airline. As part of the contract, the manufacturer is also providing training to the airline's pilots. At the time of the audit, the delivery of the aircraft had fallen substantially behind schedule while the training had already been completed. If half of the aircraft under contract have been delivered, which of the following should the internal auditor expect to be accounted for in the general ledger?