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At a construction company, an internal auditor is planning an audit of the company's process for designing and building grid connections The process involves customers making payments m three parts
• The first payment of 10% after approval of the customer s application
• The second payment of 70% prior to construction
• The third payment of 20% after construction is complete
Which of the following key controls should the auditor test to ensure that the company is not taking any unwanted credit risks?
Which of the following evaluation criteria would be the most useful to help the chief audit executive determine whether an external service provider possesses the knowledge, skills, and other competencies needed to perform a review?
Which of the following is a significant governance issue that should be reported by the chief audit executive to the board?
Which of the following statements accurately describes the Standards requirement for ret internal audit records?
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?
An internal auditor wants to compare performance information from one quarter to another. Which analytics procedure would the auditor use?
An internal auditor recommended that an organization implement computerized controls in its sales system in order to prevent sales representatives from executing contracts in excess of their delegated authority levels A follow-up review found that the sales system had not been modified, but a process had been implemented to obtain written approval by the vice president of sales for all contracts in excess of S1 million The chief audit executive (CAE) would be justified in reporting this situation to the organization's board under which of the tollowing circumstances'?
1. In the opinion of the CAE the level of residual risk assumed by senior management is too high
2. Testing of compliance with the new process finds that all new contracts in excess of $1 million have been approved by the vice president of sales
3. The cost of modifying the sales system to include a preventive control is less than S100.000
Which of the following is the most appropriate approach for the internal audit activity to follow up on management action plans?
During an assurance engagement, an internal auditor noted that the time staff spent accessing customer information in large Excel spreadsheets could be reduced significantly through the use of macros. The auditor would like to train staff on how to use the macros. Which of the following is the most appropriate course of action for the internal auditor to take?
The internal audit activity has adopted the balanced scorecard approach to assess its performance According to MA guidance which of the following is a key performance indicator relevant to the audit client?
Due to price risk from the foreign currency purchase of aviation fuel, an airliner has purchased forward contracts to hedge against fluctuations in the exchange rate. When recalculating the exchange losses from individual purchases of jet fuel, which of the following details does the internal auditor need to validate?
1. The hedge documentation designating the hedge.
2. The spot exchange rate on the transaction date.
3. The terms of the forward contract.
4. The amount of fuel purchased.
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 should be included in a privacy audit engagement?
1. Assess the appropriateness of the information gathered.
2. Review the methods used to collect information.
3. Consider whether the information collected is in compliance with applicable laws.
4. Determine how the information is stored.
An internal auditor was assigned to review controls in the accounts payable function. Most of tie accounts payable processes are performed by a third-party service provider. The auditor included in the audit report a number of control deficiencies involving processes performed by the service provider. The service provider requested a copy of the report Which of Vie following would be the most appropriate response from the chief audit executive (CAE)?
Where should internal auditor focus their attention when identify and assessing key risks during the planning stage of an assurance engagement?
During a fraud interview, it was discovered that unquestioned authority enabled a vice president to steal funds from the organization. Which of the following best describes this condition?
An engagement work program o of greatest value to audit management when which of the following is true?
According to IIA guidance, which of the following factors should the auditor in charge consider when determining the resource requirements for an audit engagement?
An engagement team is being assembled to audit of one of the organization's vendors Which of the following statements best applies to this scenario?
Which of the following statements is true regarding internal control questionnaires?
An internal auditor has been assigned to facilitate a risk and control self-assessment for the finance group. Which of the following is the most appropriate role that she should assume when facilitating the workshop?
Which of the following reasonably represents best practices regarding what should be the level of internal audit resource investment in monitoring and following up on engagement outcomes?
According to the IIA guidance, which of the following foes the engagement work test in a review in a review of an organization al process?
An internal audit team leader is having difficulties completing the planning phase of an assurance engagement because the business unit lacks a system of internal controls. Which of the following is the most appropriate course of action for the internal audit team leader?
According to IIA guidance which of the following best describes reliable information?
Which of the following is an appropriate documentation of proper engagement supervision?
Which of the following components should be included in an audit finding?
1. The scope of the audit.
2. The standard(s) used by the auditor to make the evaluation.
3. The engagement's objectives.
4. The factual evidence that the internal auditor found in the course of the examination.
Which of the following would most likely cause an internal auditor to consider adding fraud work steps to the audit program?
An internal auditor is conducting a review of the procurement function and uncovers a potential conflict of interest between the chief operating officer and a significant supplier of IT software development services. Which of the following actions is most appropriate for the internal auditor to take?
Which of the following attribute sampling methods would be most appropriate to use to measure the total misstatement posted to an accounts payable ledger?
An internal auditor is asked to perform an assurance engagement in the organization's newly acquired subsidiary When developing the objectives tor the engagement which ot the following statements describes the most important items that the auditor needs to consider?
The final engagement communication contains the following observation:
The internal auditor discovered that three of the 10 contracts reviewed failed to meet the organization's competitive bidding requirements Management explained that senior management deemed these purchases to be critical and awarded them as sole-source."
Which of the following components is missing in the documentation of the observation?
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?
According to IIA guidance, which of the following statements is true regarding the authority of the chief audit executive (CAE) to release previous audit reports to outside parties?
Which of the following parties is accountable for ensuring adequate support for conclusions and opinions readied by the internal audit activity while relying on external auditors' work?
According to IIA guidance, which of the following procedures would be least effective in managing the risk of payroll fraud?
Which of the following is one of the five attributes that internal auditors include when documenting a deficiency?
An organization recently acquired a subsidiary in a new industry, and management asked the chief audit executive (CAE) to perform a comprehensive audit of the subsidiary prior to recommencing operations The CAE is unsure her team has the necessary skills and knowledge to accept the engagement According to IIAguidance, which of the following responses by the CAE would be most appropriate?
The chief audit executive of a medium-sized financial institution is evaluating the staffing model of the internal audit activity (IAA). According to IIA guidance, which of the following are the most appropriate strategies to maximize the value of the current IAA resources?
• The annual audit plan should include audits that are consistent with the skills of the IAA.
• Audits of high-risk areas of the organization should be conducted by internal audit staff.
• External resources may be hired to provide subject-matter expertise but should be supervised.
• Auditors should develop their skills by being assigned to complex audits for learning opportunities.
What is the primary purpose of issuing a preliminary communication to management of the area under review?
While planning for an accounts payable audit an internal auditor performs an entity level controls analysis. Which of the following statements is true regarding me approach used by the auditor?
What type of audit engagement would be the most appropriate to determine how an organization could be more profitable in the long term?
After finalizing an assurance engagement concerning safety operations in the oil mining process, the audit team concluded that no key controls were compromised. However, some opportunities for improvement were noted. Which of the following would be the most appropriate way for the chief audit executive (CAE) to report these results?
According to IIA guidance, which of re following actions should the internal auditor take immediately after having considered fraud scenarios and identified and prioritized fraud risks?
According to IIA guidance, organizations have the most influence on which element of fraud?
An audit observation states the following:
"Despite the rules of the organization there is no approved credit risk management policy in the subsidiary. The subsidiary is concluding contacts with clients who have very high credit ratings. The internal audit team tested 50 contacts and 17 showed clients with a poor credit history"
Which of the following components are missing in the observation?
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?
During an audit of the accounts receivable (AR) process, an internal auditor noted that reconciliations are still not performed regularly by the AR staff, a recommendation that was made following a previous audit. Monitoring by the financial reporting function has failed to detect the shortcoming. Both the financial reporting function and AR report to the controller, who is responsible for implementing action plans. Which of the following supports the internal auditor's decision to combine both observations into one reported finding?
TESTED 25 Apr 2024
