Exam 4: Conducting the Internal Audit Engagement

Due to the expanded role of internal audit in the organization, the chief audit executive (CAE) of a construction company decides to employ the services of an outsourced audit service provider to augment the internal audit staff. What does the CAE need to consider in determining whether the outsourced audit service provider possesses the necessary knowledge, skills and other competencies to perform an audit engagement?

An organization has recently incurred significant cost overruns on one of its construction projects. Management suspects that these overruns were caused by the contractor improperly charging for costs related to contract change orders. Which of the following procedures are appropriate for testing this suspicion? 1. Determine if the contractor has received proper approval of change orders from management. 2. Determine if the contractor has billed for original contract work cancelled by the change orders. 3. Determine if the contractor has charged change orders with costs already billed to the original contract. 4. Determine if the contractor has been paid for change orders that have not yet been completed.

What would be used to determine the collectability of accounts receivable balances?

Which of the following are key characteristics of enterprise risk management? 1. It considers risk in the formulation of strategy. 2. It applies risk management in some units of an entity. 3. It takes a portfolio view of risks throughout the enterprise. 4. It restricts the organization's ability to seize opportunities inherent in future events.

Which of the following statements is correct regarding the use of a program evaluation and review technique (PERT) model? • It makes use of a probability model to arrive at a realistic estimate of time necessary for completion of the audit engagement. • It requires that activities are performed in sequence such that each task is completed before the commencement of the next activity. • It remains fixed once completed to act as a baseline for measuring the performance of the audit staff following completion of the engagement. • It begins with the auditor-in-charge identifying the overall scope and then breaking down the audit engagement into identifiable activity units.

According to IIA guidance, which of the following is true regarding the exit conference for an internal audit engagement?

Which of the following will be an appropriate course of action when an auditor disagrees with a client about a well-documented audit finding?

Which of the following statements is true regarding the communication of audit engagement observations?

According to IIA guidance, which of the following statements is false regarding a review of the controls in place to prevent fraud?

When internal auditors provide consulting services, the scope of the engagement is primarily determined by:

The most effective procedure to verify compliance with a requirement that materials be purchased from the lowest-priced source is to compare:

An internal auditor for a large telecommunications organization identified potential risk factors related to a planned billing system conversion. Which of the following risk factors would present the least potential exposure to the organization?

According to IIA guidance, which of the following individuals should receive the final audit report on a compliance engagement for the organization's cash disbursements process?

Which of the following is the primary purpose of financial statement audit engagements?

During an information security audit, an auditor discovers that the current disaster recovery plan was developed three years ago but never tested. There have been significant changes to information systems since the plan was developed. The auditor should:

During the audit of a large decentralized supply chain function, the chief audit executive (CAE) receives serious allegations of fraud concerning the vice president responsible for this function. The CAE engages a third party to provide forensic audit services and lead the investigation portion of the engagement. As part of this team, which of the following would be an appropriate role for the investigator? 1. Authenticate the original approval signatures on contracts. 2. Interview personnel to understand the supply chain processes. 3. Provide certified copies of relevant original documents for the audit file. 4. Identify variances in pixels on original electronic documents.

Which of the following actions has the least influence on the chief audit executive's development of an audit plan?

An internal auditor is conducting a financial audit. Which of the following audit procedures is most appropriate when existing internal controls are weak?

Which of the following potential performance measures should an auditor recommend excluding from a performance scorecard?

An organization contracted a third party to construct a new facility that was estimated to cost $25 million. Which of the following is the most pertinent reason for the organization to audit the contractor's records?