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Question 16 Selectable Answer

A technology company recently hired an entry-level internal auditor. To achieve conformance with the Standards, which of the following must the newly hired internal auditor possess?

A. An understanding of fraud and fraud risk.
B. IT audit expertise.
C. Industry-specific knowledge
D. At least one audit-related certification

Answer:

Question 17 Selectable Answer

The chief audit executive of a large national retailer is reviewing the purpose and objectives of the organization's internal audit activity
Which of the following objectives is best aligned with The IIA's Mission of Internal Audit?

A. To implement a quality assurance and improvement program
B. To assess the effectiveness of internal controls over organizational assets
C. To ensure internal auditors possess the competencies needed to perform their responsibilities
D. To operate within the budget established by the board of directors

Answer:

Question 18 Selectable Answer

A chief audit executive (CAE) has just joined an organization with an existing internal audit activity. Based on her review of the current organizational structure, the CAE determines that the internal audit activity lacks adequate independence.
Which of the following actions is the CAE's best step to take next to move the internal audit activity toward organizational independence?

A. Ensure the limitations are disclosed through communication with the board and senior management, so that the internal audit activity can continue operating under the same organizational structure.
B. Request that the board restructure the reporting line of the internal audit activity to ensure the CAE has unrestricted access to the board.
C. Rotate internal audit assignments among members of the internal audit activity to minimize the effects of the current structure.
D. Train internal auditors about organizational independence and have them sign an acknowledgment of understanding.

Answer:

Question 19 Selectable Answer

What should the chief audit executive do when the internal audit activity is found to be in nonconformance with the Code of Ethics or the Standards?

A. Assign competent staff to the area under audit to remediate the nonconformance.
B. Determine how the deviation impacted the overall scope of the internal audit activity.
C. Meet with the board to gam an understanding of the board's expectations.
D. Communicate the matter to the board at the time of the next external assessment.

Answer:

Question 20 Selectable Answer

According to IIA guidance, which of the following statements is true regarding the internal audit activity's quality assurance and improvement program (QAIP)?

A. Internal assessments rely solely on the review of completed audit engagements for demonstrated performance.
B. The chief audit executive is responsible for assessing the suitability and competence of an external assessor.
C. QAIP results must first be discussed with the board and approval obtained for distribution to senior management.
D. At the board's discretion, the frequency of external assessments can exceed the five-year guideline.

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Question 21 Selectable Answer

Which of the following describes a primary responsibility for the internal audit activity in helping management maintain effective controls?

A. Promoting continuous evaluation
B. Promoting continuous monitoring
C. Promoting continuous improvement
D. Promoting continuous reporting

Answer:

Question 22 Selectable Answer

An internal auditor is updating the risk register for risks identified during a recent organizational risk assessment. According to the Standards, which of the following would the auditor include in the risk register?

A. Management’s acceptance of inadequate controls for cybersecurity risk.
B. Discussions with senior management relating to a new revenue stream.
C. Mitigating controls implemented by the engagement supervisor
D. Project manager planned hours versus time spent for all prior year projects

Answer:

Question 23 Selectable Answer

Which of the following policies promotes internal audit objectivity?

A. The chief audit executive (CAE) reports functionally to the CEO
B. The CAE s compensation is approved by the chief financial officer
C. The CAF's appointment is determined by the CEO
D. The CAE reports administratively to the chief operating officer

Answer:

Question 24 Selectable Answer

A newly appointed chief audit executive (CAE) started analyzing the organization's policies in an attempt to customize them to address internal audit specifics.
Which of the following organizationwide practices is most likely to be acceptable to the CAE?

A. Internal auditors1performance evaluation is primarily based on both client satisfaction surveys and cost savings identified from the audits.
B. Standard training for each employee, including internal auditors, is 10 hours per year.
C. To enhance efficiency, internal auditors should not be rotated regularly among engagements.
D. Hiring practices include requiring potential auditors to disclose any significant stock ownership in the organization.

Answer:

Question 25 Selectable Answer

Which of the following controls would best mitigate the risk of fraud in the bidding process?

A. Have a bidding committee open the tender bids.
B. Restrict the time to submit tender bids.
C. Keep minutes of pre-bid meetings.
D. Allow the higher tenders to rebid.

Answer:

Question 26 Selectable Answer

Which of the following statements is true regarding how the scope of a consulting engagement should be established?

A. The engagement client should be able to determine the scope to be applied to the engagement
B. The internal auditor should establish a scope that does not impair her objectivity
C. Any attempts by the engagement client to limit the scope should be considered a scope limitation
D. The scope should include reviewing the effectiveness of the internal control environment

Answer:

Question 27 Selectable Answer

Which of the following best demonstrates conformance with the Standards regarding the internal audit activity's purpose authority, and responsibility?

A. Discussion and formal presentation of the internal audit charter to the board of directors
B. Certification by external auditors on the purpose, authority and responsibility of the internal audit activity
C. Approval of senior management that the internal audit activity is functioning as originally designed
D. Self-assessment of the internal audit activity completed by the chief audit executive

Answer:

Question 28 Selectable Answer

A snow removal company is conducting a scenario planning exercise where participating employees consider the potential impacts of a significant reduction in annual snowfall for the coming winter.
Which of the following best describes this type of risk?

A. Residual.
B. Net.
C. Inherent.
D. Accepted.

Answer:

Question 29 Selectable Answer

To assure that the technical proficiency of internal auditors is appropriate for the audit engagements to be performed, a chief audit executive should:

A. Consider the scope of work and level of responsibility when establishing criteria for education and experience in filling internal audit positions.
B. Ensure that each newly hired auditor is qualified in all of the disciplines needed to accomplish the department’s audit mission.
C. Oversee a training program that matches the actual training provided with the interests of individual auditors.
D. Require all of the audit staff to pursue a minimum number of continuing professional education hours each year

Answer:

Question 30 Selectable Answer

An internal auditor extended the scope of testing for a disbursements engagement following a fraud risk assessment Despite the investment of additional audit resources no significant issues were found Unfortunately a major payment fraud was discovered several
months later According to IIA guidance which of the following statements is true regarding the internal auditor's application of due professional care?

A. Due professional care was not applied because no additional work should have been performed unless there was actual evidence of fraud
B. Due professional care was not applied because the extended scope resulted in no issues being identified, while fraud actually existed
C. Due professional care was applied as the internal auditor modified the scope based on reasonable judgment, despite the additional cost of resources
D. Due professional care was applied as the cost of audit resources should not be a determining factor in the degree of testing undertaken

Answer:

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