Question 1

Which of the following is a preventive control strategy against fraud?

Accepted Answer

A)  Performing a surprise audit. 
B)  Maintaining a whistleblower hotline. 
C)  Implementing control self-assessment. 
D)  Performing background checks on employees. 
A)  Performing a surprise audit. 
B)  Maintaining a whistleblower hotline. 
C)  Implementing control self-assessment. 
D)  Performing background checks on employees.

Question 2

According to the Standards, which of the following would have the least direct interest in the draft report of a compliance review of the purchasing function?

Accepted Answer

A)  Purchasing staff. 
B)  Purchasing manager. 
C)  Director of finance. 
D)  Audit committee. 
A)  Purchasing staff. 
B)  Purchasing manager. 
C)  Director of finance. 
D)  Audit committee.

Question 3

Which of the following conclusions would be appropriate for a beginning auditor performing an audit of a payroll department?

Accepted Answer

A)  Employee taxes have been deducted at the correct rates, and the taxes have been forwarded to the appropriate government agency. 
B)  Although there is insufficient segregation of duties, the impact is mitigated by compensating controls. 
C)  The payroll computer system should be replaced. 
D)  The payroll department staff has the appropriate level of skills. 
A)  Employee taxes have been deducted at the correct rates, and the taxes have been forwarded to the appropriate government agency. 
B)  Although there is insufficient segregation of duties, the impact is mitigated by compensating controls. 
C)  The payroll computer system should be replaced. 
D)  The payroll department staff has the appropriate level of skills.

Question 4

Which of the following audit planning activities adds the least value in understanding the current risk exposures facing the corporation?

Accepted Answer

A)  Review of organizational strategic plans and operational plans. 
B)  Consultation with senior management and the audit committee. 
C)  Review of the external auditor's risk assessment. 
D)  Review of corporate performance reporting and benchmarking. 
A)  Review of organizational strategic plans and operational plans. 
B)  Consultation with senior management and the audit committee. 
C)  Review of the external auditor's risk assessment. 
D)  Review of corporate performance reporting and benchmarking.

Question 5

The internal audit activity's primary responsibility in a review or examination of the organization by an external regulatory body is to:

Accepted Answer

A)  Verify that regulatory reviews occur with adequate frequency. 
B)  Provide follow-up to determine if the regulator's findings are appropriately resolved by management. 
C)  Prepare documentation for the regulator. 
D)  Document the responses to the regulator's findings. 
A)  Verify that regulatory reviews occur with adequate frequency. 
B)  Provide follow-up to determine if the regulator's findings are appropriately resolved by management. 
C)  Prepare documentation for the regulator. 
D)  Document the responses to the regulator's findings.

Question 6

According to the International Professional Practices Framework, the responsibility for establishing and maintaining a system to monitor the disposition of results communicated to management falls upon:

Accepted Answer

A)  Compliance officer. 
B)  Chief audit executive. 
C)  Senior management. 
D)  Risk manager. 
A)  Compliance officer. 
B)  Chief audit executive. 
C)  Senior management. 
D)  Risk manager.

Question 7

According to IIA guidance, which of the following is least likely to be a key financial control in an organization's accounts payable process?

Accepted Answer

A)  Require the approval of additions and changes to the vendor master listing, where the inherent risk of false vendors is high. 
B)  Monitor amounts paid each period and compare them to the budget to identify potential issues. 
C)  Compare employee addresses to vendor addresses to identify potential employee fraud. 
D)  Monitor customer quality complaints compared to the prior period to identify vendor issues. 
A)  Require the approval of additions and changes to the vendor master listing, where the inherent risk of false vendors is high. 
B)  Monitor amounts paid each period and compare them to the budget to identify potential issues. 
C)  Compare employee addresses to vendor addresses to identify potential employee fraud. 
D)  Monitor customer quality complaints compared to the prior period to identify vendor issues.

Question 8

An organization has a large number of vendors supplying goods to its various branches across the region. The code of conduct statements signed by the employees specify that the employees or their families will not sell goods to the organization. However, during the internal audit of a branch, the internal auditor suspected that some of the employees may be supplying goods to the organization contrary to the code of conduct. The chief audit executive has requested that a thorough review be completed to identify the potential employee vendors. Of the following tests, it would be least useful to compare [List A] with [List B]. [List A] [List B]

Accepted Answer

A)  Vendor bank account numbers Employee bank account numbers 
B)  Dates of payments to vendors Dates of salary payments to employees 
C)  Addresses of vendors from the vendor database Addresses of employees from the employee database 
D)  Vendor names Employee names 
A)  Vendor bank account numbers Employee bank account numbers 
B)  Dates of payments to vendors Dates of salary payments to employees 
C)  Addresses of vendors from the vendor database Addresses of employees from the employee database 
D)  Vendor names Employee names

Question 9

According to IIA guidance, which of the following should be considered when creating policies and procedures for the internal audit activity (IAA)?

Accepted Answer

A)  Number of auditors, complexity of audit activities, and structure of the IAA. 
B)  Number of auditors, complexity of audit activities, and audit staff skills and competencies. 
C)  Number of auditors, structure of the IAA, and audit staff skills and competencies. 
D)  Complexity of audit activities, structure of the IAA, and audit staff skills and competencies. 
A)  Number of auditors, complexity of audit activities, and structure of the IAA. 
B)  Number of auditors, complexity of audit activities, and audit staff skills and competencies. 
C)  Number of auditors, structure of the IAA, and audit staff skills and competencies. 
D)  Complexity of audit activities, structure of the IAA, and audit staff skills and competencies.

Question 10

According to the International Professional Practices Framework, which of the following would not be considered when performing an initial risk assessment in engagement planning?

Accepted Answer

A)  The reliability of management's assessment of risk. 
B)  Management's process for monitoring, reporting, and resolving risk issues. 
C)  Management's methodology for defining risk criteria. 
D)  Risks in related activities relevant to the activity under review. 
A)  The reliability of management's assessment of risk. 
B)  Management's process for monitoring, reporting, and resolving risk issues. 
C)  Management's methodology for defining risk criteria. 
D)  Risks in related activities relevant to the activity under review.

Question 11

A limitation of using ratio analysis in an audit engagement is that it:

Accepted Answer

A)  Often uses financial information provided by management which has not been reviewed for reliability and validity. 
B)  Is an expensive method of testing. 
C)  Requires computer software in order to develop meaningful interpretations of data. 
D)  Is useful only when comparisons can be made across other industries. 
A)  Often uses financial information provided by management which has not been reviewed for reliability and validity. 
B)  Is an expensive method of testing. 
C)  Requires computer software in order to develop meaningful interpretations of data. 
D)  Is useful only when comparisons can be made across other industries.

Question 12

As part of an operational audit, an auditor compared records of current inventory with usage during the prior two-year period and determined that the spare parts inventory was excessive. What step should the auditor perform first?

Accepted Answer

A)  Determine the effects of a stock-out on the organization's profitability. 
B)  Determine whether a clear policy exists for setting inventory limits. 
C)  Determine who approved the purchase orders for the spare parts. 
D)  Determine whether purchases were properly recorded. 
A)  Determine the effects of a stock-out on the organization's profitability. 
B)  Determine whether a clear policy exists for setting inventory limits. 
C)  Determine who approved the purchase orders for the spare parts. 
D)  Determine whether purchases were properly recorded.

Question 13

Which of the following tasks would be considered unusual for planning a control self-assessment workshop?

Accepted Answer

A)  Conducting interviews to identify relevant issues for the discussion. 
B)  Identifying key stakeholders and ensuring they are represented in the group. 
C)  Securing an external subject matter expert to arbitrate disputes. 
D)  Ensuring that managers are willing to accept constructive criticism. 
A)  Conducting interviews to identify relevant issues for the discussion. 
B)  Identifying key stakeholders and ensuring they are represented in the group. 
C)  Securing an external subject matter expert to arbitrate disputes. 
D)  Ensuring that managers are willing to accept constructive criticism.

Question 14

In which of the following cases is it appropriate for an audit report to not contain management's response either within the report or as an attachment?

Accepted Answer

A)  Management's response to an audit report is generally not a requirement. 
B)  Internal controls were found to be properly designed and operating effectively although operations are deemed inefficient. 
C)  There was insufficient time to obtain management's response during the draft reporting process. 
D)  An internal audit report contains no observations. 
A)  Management's response to an audit report is generally not a requirement. 
B)  Internal controls were found to be properly designed and operating effectively although operations are deemed inefficient. 
C)  There was insufficient time to obtain management's response during the draft reporting process. 
D)  An internal audit report contains no observations.

Question 15

Which of the following is not a reason for an internal auditor to prepare an audit plan before the detailed audit work begins?

Accepted Answer

A)  The objectives of the audit should be set. 
B)  The organization's management should be informed about the work to be performed. 
C)  Attention should be devoted toward the key audit areas. 
D)  The timing of the audit should be set. 
A)  The objectives of the audit should be set. 
B)  The organization's management should be informed about the work to be performed. 
C)  Attention should be devoted toward the key audit areas. 
D)  The timing of the audit should be set.

Question 16

To furnish useful and timely information and promote improvements in operations, internal auditors should provide:

Accepted Answer

A)  Senior management with reports that emphasize the operational details of defective conditions. 
B)  Operating management with reports that emphasize general concerns and risks. 
C)  Information in written form before it is discussed with the engagement client. 
D)  Reports that meet the expectations of both operational and senior management. 
A)  Senior management with reports that emphasize the operational details of defective conditions. 
B)  Operating management with reports that emphasize general concerns and risks. 
C)  Information in written form before it is discussed with the engagement client. 
D)  Reports that meet the expectations of both operational and senior management.

Question 17

An auditor-in-charge is preparing her audit team for a consulting engagement at one of the organization's foreign subsidiaries. According to the Standards, which of the following would not be a necessary step prior to beginning the engagement?

Accepted Answer

A)  Verify that none of the audit team worked for the foreign subsidiary within the last year to ensure independence. 
B)  Agree, in writing, with the subsidiary's senior management regarding the scope of the engagement. 
C)  Communicate a time frame as well as a contingency plan in the event the engagement may take longer than expected. 
D)  Communicate what logistical support will be provided by the subsidiary for the duration of the engagement. 
A)  Verify that none of the audit team worked for the foreign subsidiary within the last year to ensure independence. 
B)  Agree, in writing, with the subsidiary's senior management regarding the scope of the engagement. 
C)  Communicate a time frame as well as a contingency plan in the event the engagement may take longer than expected. 
D)  Communicate what logistical support will be provided by the subsidiary for the duration of the engagement.

Question 18

Which of the following situations would justify the removal of a finding from the final audit report?

Accepted Answer

A)  Management disagrees with the report findings and conclusions in their responses. 
B)  Management has already satisfactorily completed the recommended corrective action. 
C)  Management has provided additional information that contradicts the findings. 
D)  Management believes that the finding is insignificant and unfairly included in the report. 
A)  Management disagrees with the report findings and conclusions in their responses. 
B)  Management has already satisfactorily completed the recommended corrective action. 
C)  Management has provided additional information that contradicts the findings. 
D)  Management believes that the finding is insignificant and unfairly included in the report.

Question 19

Which of the following would have the least significance in an audit of the efficiency of a driver's license testing facility?

Accepted Answer

A)  Clerical staff administer written tests to allow examiners more time to supervise driving tests. 
B)  Staff are cross-trained to provide backup for other areas of the facility as required. 
C)  A point-of-sale cashiering system reduces the need to reenter payment data. 
D)  Examiners are required to be recertified on an annual basis. 
A)  Clerical staff administer written tests to allow examiners more time to supervise driving tests. 
B)  Staff are cross-trained to provide backup for other areas of the facility as required. 
C)  A point-of-sale cashiering system reduces the need to reenter payment data. 
D)  Examiners are required to be recertified on an annual basis.

Question 20

Which of the following is a justifiable reason for omitting advance client notice when planning an audit engagement?

Accepted Answer

A)  Advance notice may result in management making corrections to reduce the number of potential deficiencies. 
B)  Previous management action plans addressing prior internal audit recommendations remain incomplete. 
C)  The engagement includes audit assurance procedures such as sensitive or restricted asset verifications. 
D)  The audit engagement has already been communicated and approved through the annual audit plan. 
A)  Advance notice may result in management making corrections to reduce the number of potential deficiencies. 
B)  Previous management action plans addressing prior internal audit recommendations remain incomplete. 
C)  The engagement includes audit assurance procedures such as sensitive or restricted asset verifications. 
D)  The audit engagement has already been communicated and approved through the annual audit plan.

Which of the following is a preventive control strategy against fraud?

According to the Standards, which of the following would have the least direct interest in the draft report of a compliance review of the purchasing function?

Which of the following conclusions would be appropriate for a beginning auditor performing an audit of a payroll department?

Which of the following audit planning activities adds the least value in understanding the current risk exposures facing the corporation?

The internal audit activity's primary responsibility in a review or examination of the organization by an external regulatory body is to:

According to the International Professional Practices Framework, the responsibility for establishing and maintaining a system to monitor the disposition of results communicated to management falls upon:

According to IIA guidance, which of the following is least likely to be a key financial control in an organization's accounts payable process?

According to IIA guidance, which of the following should be considered when creating policies and procedures for the internal audit activity (IAA)?

According to the International Professional Practices Framework, which of the following would not be considered when performing an initial risk assessment in engagement planning?

A limitation of using ratio analysis in an audit engagement is that it:

As part of an operational audit, an auditor compared records of current inventory with usage during the prior two-year period and determined that the spare parts inventory was excessive. What step should the auditor perform first?

Which of the following tasks would be considered unusual for planning a control self-assessment workshop?

In which of the following cases is it appropriate for an audit report to not contain management's response either within the report or as an attachment?

Which of the following is not a reason for an internal auditor to prepare an audit plan before the detailed audit work begins?

To furnish useful and timely information and promote improvements in operations, internal auditors should provide:

An auditor-in-charge is preparing her audit team for a consulting engagement at one of the organization's foreign subsidiaries. According to the Standards, which of the following would not be a necessary step prior to beginning the engagement?

Which of the following situations would justify the removal of a finding from the final audit report?

Which of the following would have the least significance in an audit of the efficiency of a driver's license testing facility?

Which of the following is a justifiable reason for omitting advance client notice when planning an audit engagement?

Certified Financial Services Auditor

Certified Government Auditing Professional

The Internal Audit Activity Role in Governance, Risk, and Control

Business Analysis and Information Technology

Filters

Exam 4: Conducting the Internal Audit Engagement

Which of the following is a preventive control strategy against fraud?

According to the Standards, which of the following would have the least direct interest in the draft report of a compliance review of the purchasing function?

Which of the following conclusions would be appropriate for a beginning auditor performing an audit of a payroll department?

Which of the following audit planning activities adds the least value in understanding the current risk exposures facing the corporation?

The internal audit activity's primary responsibility in a review or examination of the organization by an external regulatory body is to:

According to the International Professional Practices Framework, the responsibility for establishing and maintaining a system to monitor the disposition of results communicated to management falls upon:

According to IIA guidance, which of the following is least likely to be a key financial control in an organization's accounts payable process?

According to IIA guidance, which of the following should be considered when creating policies and procedures for the internal audit activity (IAA)?

According to the International Professional Practices Framework, which of the following would not be considered when performing an initial risk assessment in engagement planning?

A limitation of using ratio analysis in an audit engagement is that it:

As part of an operational audit, an auditor compared records of current inventory with usage during the prior two-year period and determined that the spare parts inventory was excessive. What step should the auditor perform first?

Which of the following tasks would be considered unusual for planning a control self-assessment workshop?

In which of the following cases is it appropriate for an audit report to not contain management's response either within the report or as an attachment?

Which of the following is not a reason for an internal auditor to prepare an audit plan before the detailed audit work begins?

To furnish useful and timely information and promote improvements in operations, internal auditors should provide:

An auditor-in-charge is preparing her audit team for a consulting engagement at one of the organization's foreign subsidiaries. According to the Standards, which of the following would not be a necessary step prior to beginning the engagement?

Which of the following situations would justify the removal of a finding from the final audit report?

Which of the following would have the least significance in an audit of the efficiency of a driver's license testing facility?

Which of the following is a justifiable reason for omitting advance client notice when planning an audit engagement?

Certified Financial Services Auditor

Certified Government Auditing Professional

The Internal Audit Activity Role in Governance, Risk, and Control

Business Analysis and Information Technology

Filters