Which of the following is the best approach for obtaining feedback from engagement clients
regarding the quality of internal audit work?

A.

Ask questions during the exit interviews and send copies of the documented responses to the
clients.

B.

Call engagement clients after the exit interviews and send copies of the documented responses
to the clients.

C.

Distribute questionnaires to selected engagement clients shortly before preparing the internal
audit annual activity report.

D.

Provide questionnaires to engagement clients at the beginning of each engagement and
request that the clients complete and return them after the engagements

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:

A.

Legal counsel.

B.

External auditor.

C.

Audit committee chairperson.

D.

Chief executive officer.

Senior management of an organization has requested that the internal audit activity provide
ongoing internal control training for all managerial personnel. This is best addressed by:

A.

A formal consulting engagement.

B.

An informal consulting engagement.

C.

A performance assurance engagement.

D.

An operational assurance engagement.

A key to effective benchmarking in a consulting engagement is identifying the issues that can be:|

A.

Reviewed by all internal audit staff members.

B.

Shared with all internal audit customers.

C.

Measured and controlled by the engagement client.

D.

Discussed with the board or audit committee

After issuance of the engagement final communication for an audit of an organization's accounts
payable function, which of the following should be sent satisfaction surveys?
I. Manager of disbursements.
II. Controller.
III. Chief operating officer.
IV. Audit committee members.

A.

I only

B.

I and II only

C.

II and III only

D.

II, III, and IV only

In a client satisfaction survey for an internal audit engagement, client management should be
asked to assess which of the following factors?
I. Audit team's knowledge of the audited area.
II. Usefulness of the audit results.
III. Quality of management of the internal audit activity.
IV. Clarity of the scope and objectives of the audit engagement

A.

I and II only

B.

 II and IV only

C.

I, II, and IV only

D.

 I, III, and IV only

In response to an accounts receivable confirmation, a customer indicated that the invoice listed on
the confirmation letter had been paid two months earlier.
This may indicate that:

A.

The receivable was selected for confirmation in error.

B.

The customer is a bad credit risk.

C.

The receivable should be written off.

D.

 Fraudulent activity has occurred.

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

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.

An audit of customer accounts receivable found that outstanding receivables as a percentage of
revenue had increased significantly during the past two years. The increase was attributed to the
extension of credit, at the urging of the marketing department, to a number of companies that were
not creditworthy. Which of the following would be least useful in monitoring the disposition of this
finding?

A.

Responses from the manager of accounts receivable regarding collection of outstanding
receivables.

B.

Periodic updates from the controller regarding the status of corrective actions.

C.

Information from the credit and marketing personnel assigned the responsibility for reevaluating
credit policies.

D.

Updates from the information technology division regarding implementation of a new accounts
receivable system.

During an audit of a major metropolitan museum, an auditor was unable to locate selected items
from the museum's collection. The director of the museum informed the auditor that the upcoming
replacement of the museum's inventory tracking system would address the auditor's concerns.
What follow-up activity should the auditor propose?

A.

Receive periodic feedback from museum staff regarding the status of the system
implementation.

B.

Monitor the system implementation and schedule a follow-up review once the new system is in
place.

C.

Determine whether the items are indeed missing and assess the ability of the new system to
remedy the problem.

D.

 Schedule an audit of the museum's security systems to determine if theft is a problem.

An audit of a Web-based third-party payment processor determined that a programming error
enabled customers to create multiple accounts for each mailing address. This caused problems during the processing of credit card transactions. Management agreed to correct the program and
notify customers with multiple accounts that the accounts would be consolidated. What should the
auditor do in response?
I. Amend the scope of the subsequent audit to verify that the program was corrected and that
accounts were consolidated.
II. Evaluate the adequacy and effectiveness of the corrective action proposed by management.
III. Schedule a follow-up review to verify that the program was corrected and the accounts were
consolidated.
IV. Do nothing because management has agreed to address the problem.

A.

III only

B.

IV only

C.

 I and II only

D.

 II and III only

A company's cellular phone costs vary significantly by sales representative and by month. Which
of the following would be the most appropriate approach for a consulting project concerning this
issue?

A.

Control self-assessment involving sales representatives.

B.

Benchmarking with other cellular phone users.

C.

 Business process review of cellular phone needs.

D.

Performance measurement and design of the budgeting process