Exam 4: Conducting the Internal Audit Engagement

A performance audit engagement typically involves:

Which of the following would be the most important reason for the chief audit executive (CAE) to use inputs from management strategy to update the audit universe?

After completing a fraud investigation but before publishing a formal written report, the chief audit executive should submit a draft of the final report to the organization's:

An auditor receives anonymous information that fraud is occurring in the operation being audited, but no details are given as to the type of fraud or the individuals involved. There are several areas in which fraud could occur. The auditor should:

Which of the following is a responsibility of the internal auditor once a fraud investigation has been concluded?

The internal audit activity of an organization obtained approval to add a senior auditor to its staff. The chief audit executive, audit manager, and audit supervisor each will interview the candidates. According to the Standards, which of the following best explains the involvement of management in the interview process?

The newly appointed chief audit executive (CAE) of a large multinational corporation, with seasoned internal audit departments located around the world, is reviewing responsibilities for engagement reports. According to IIA guidance, which of the following statements is true?

The internal auditor is asked to conduct an investigation involving a suspected fraud. According to the Standards, which of the following statements regarding the investigation process is false?

Which of the following is a preventive control for fraud?

Which of the following situations justifies the release of an interim report to management and the board? • The internal auditor is convinced that the audit observations require immediate attention. • The internal auditor would like to communicate a change in engagement scope for the activity under review. • The internal auditor notes that the engagement may extend over a longer time period. • The audit supervisor believes that issuing interim reports eases supervisory review and controls over working papers.

According to the Standards, which of the following best describes the responsibility of the chief audit executive (CAE) for approving the final engagement report? • The CAE is responsible for obtaining management approval before issuing the final report. • The CAE has overall responsibility for the report but can delegate the review and approval of the report. • The CAE is responsible for obtaining senior management's approval before releasing the final report. • The CAE is responsible for approving to whom and how the final report will be disseminated.

A chief audit executive has noticed that staff auditors are presenting more oral reports to supplement written reports. The best reason for the increased use of oral reports is that they:

If an auditor used nonstatistical sampling instead of statistical sampling to estimate the value of inventory, which of the following would be true?

A post-audit questionnaire sent to audit clients is an effective mechanism for:

A chief audit executive (CAE) of a major retailer has engaged an independent firm of information security specialists to perform specialized internal audit activities. The CAE can rely on the specialists' work only if it is:

According to the International Professional Practices Framework, which of the following statements is correct regarding the communication of audit results?

While performing an audit of the human resources department, an internal auditor discovered unencrypted files containing the personal information of employees stored on a public shared drive. According to IIA guidance, which of the following actions by the auditor would be the most appropriate?

An auditor is performing a review of a complex process to identify opportunities to increase efficiency. What is the most practical way to document the process to identify areas of inefficiency?

A staff auditor, nearly finished with an audit engagement, discovers that the director of marketing has a gambling habit. The gambling issue is not directly related to the existing engagement and there is pressure to complete the current engagement. The auditor notes the problem and forwards the information to the chief audit executive but performs no further follow-up. The auditor's actions would:

A payroll clerk enters payroll transactions into the general ledger. The staff accountant reconciles the payroll ledgers. The payroll manager issues the manual payroll checks. The checks are maintained in a locked cabinet. The chief financial officer secures the keys to the cabinet. The payroll clerk distributes the manual checks. The payroll manager reconciles the bank statements monthly. Which of the following audit steps best addresses the risk of fraud in the payroll process?