Topic 2, Volume B
During an audit engagement,an internal auditor finds that management is not complying
with previous commitments made to the external auditors. However,the auditor determines
management's actions to be justified due to significant changes in the business. The best
course of action for the auditor to take would be to:
A.
Proceed with the audit engagement and assess the changes actually implemented by management.
B.
Inform the external auditors and seek their guidance.
C.
Inform the external auditors and remove the associated work from the internal audit scope.
D.
Compare the recommended changes against the changes made by management and advise management which action to take.
Proceed with the audit engagement and assess the changes actually implemented by management.
When performing benchmarking during the planning phase of a performance audit,an
internal auditorshould:
A.
Determine the current performance gap.
B.
Project future performance levels.
C.
Develop functional action plans.
D.
Identify comparative organizations.
Identify comparative organizations.
Which of the following would be most relevant regarding the internal control environment?
A.
Assessing controls over computerized applications.
B.
Documenting the organizational structure.
C.
Comparing and validating internal performance with external benchmarking.
D.
Maintaining and reviewing detailed financial records.
Documenting the organizational structure.
In selecting an instructional strategy for developing internal audit staff,a chief audit
executive should first reviewthe:
A.
Department's budget constraints.
B.
Internal auditors' personal development needs.
C.
Content of potential training courses.
D.
Organization's objectives.
Organization's objectives.
Which of the following statements is correct regarding corporate compensation systems
and related bonuses?
I.A bonus system should be considered part of the control environment of an organization
and should be considered in formulating a report on internal control.
II.Compensation systems are not part of an organization's control system and should not
be reported as such.
III.An audit of an organization's compensation system should be performed independently
of an audit of the control system over other functions that impact corporate bonuses.
A.
Ionly
B.
IIonly
C.
IIIonly
D.
II and IIIonly
Ionly
The primary reason that a chief audit executive (CAE) reviews external audit management
letters and management response is to:
A.
Select areas to emphasize in future internal audit engagements.
B.
Check the effectiveness of external audit resources used.
C.
Ensure that comments in the letter are supported by evidence.
D.
Verify that there has been no duplication of internal audit work.
Select areas to emphasize in future internal audit engagements.
Which of the following is most likely to be an element of an effective compliance program?
A.
The internal audit activity is assigned responsibility for overseeing the program.
B.
The program is communicated to employees in a video format on a one-time basis.
C.
The organization uses monitoring systems designed to detect improper activity.
D.
The organization obtains as much information as possible when performing background
checks on employees.
The organization uses monitoring systems designed to detect improper activity.
The best reason for separating the cash-receiving function from the related record-keeping
function is to:
A.
Segregate cash payments from cash receipts.
B.
Provide accountability for cash received.
C.
Minimize misappropriations in cash receipts.
D.
Improve physical security over the cash-receiving function.
Minimize misappropriations in cash receipts.
Which of the following,other than the internal audit charter,is most likely to define the
purpose,authority,and responsibility of the internal audit activity (IAA)?
A.
The chief audit executive job description.
B.
The internal audit policy statement.
C.
The organization's charter to conduct operations.
D.
The IAA vision statement.
The internal audit policy statement.
What conclusion can be reached by comparing a random sample of vendor invoices to
purchase orders?
A.
No duplicate invoices were received.
B.
No duplicate payments were made.
C.
Invoices were for authorized purchases.
D.
Authorized invoices were paid.
Invoices were for authorized purchases.
Which of the following results from computer assisted audit techniques provides the most
significant indication that additional audit work is needed?
A.
Several exact matches were found when vendor and employee addresses were
compared.
B.
The sum of credit entries on the bank statement did not equal the sum of collections for
the same period.
C.
Sorting the check register file by vendor name identified missing sequences of check
numbers.
D.
Matching the accounts payable transaction file with the purchase order request file
resulted in many differences between the person requesting the purchase order and the
person authorizing payment.
Several exact matches were found when vendor and employee addresses were
compared.
An internal auditor would most likely judge an error in an account balance to be material if
the error involves:
A.
A data input function.
B.
A large percentage of net income.
C.
An unverified routine transaction.
D.
An unusual transaction for the company.
A large percentage of net income.
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