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Question 76 Selectable Answer

Recently an organization’s internal audit activity discovered ghost employees who receive payments Senior management decides to strengthen the internal control measures to address this Which of the following is considered an effective control to mitigate payments to ghost employees?

A. Staff transfers are reviewed by the recruiting manager and approved by the head of human resources
B. New staff requisition forms are authorized by operational management and acknowledged by the head of human resources
C. Staff salary payments and accounting records are approved by the head of accounting and acknowledged by the head of human resources
D. The staff salary payment list is reviewed by the head of payroll and endorsed by the head of human resources

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Question 77 Selectable Answer

A series of incidents over the past year reveals several members of senior management possess a limited understanding of the concept and impact of fraud.
Which of the following would be the most effective way to approach this issue?

A. The board should ask the internal audit activity to perform additional assurance engagements.
B. A comprehensive fraud risk assessment and management program should be carried out.
C. The organization should conduct training sessions on fraud, which should be attended by senior management and staff.
D. Anti-fraud and whistleblowing policies should be implemented and their importance should be clearly stated.

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Question 78 Selectable Answer

Which of the following is an example of the chief audit executive (CAE) demonstrating due professional care?

A. The CAE relies on CAEs in other organizations to understand how due professional care should be executed in her internal audit activity
B. The CAE meets with the board of directors on a quarterly basis to provide a status update.
C. The CAE assesses the audit staff's knowledge and skills annually to determine whether additional resources are needed to fulfill the internal audit plan.
D. The CAE provides absolute assurance to line management during each eternal audit engagement

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Question 79 Selectable Answer

Which of the following statements is true regarding corporate social responsibility (CSR)?

A. Many of the areas explored by CSR are normally included in an audit universe or annual audit plan,
B. Despite significant corporate resources spent on CSR reporting, investors generally do not rely on CSR information.
C. Unlike many other areas of reporting responsibilities impacting stakeholders, CSR is largely voluntary.
D. Typically, operating management does not have a major role to play based on the public nature of reporting

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Question 80 Selectable Answer

While conducting an engagement in the procurement department, the internal auditor noticed that the department head’s travel reports showed minor travel expenses, and there were no charges for hotels, meals, or transportation. However, the auditor knew that the department head frequently traveled worldwide to meet with suppliers and visit their production sites.
Which of the following would be the most appropriate next step for the auditor?

A. The auditor should make a note of the issue for follow-up when employee travel expenses are audited.
B. The auditor should analyze trends and changes among the organization’s suppliers over the past few years.
C. The auditor should investigate whether there are any special arrangements regarding senior management travel.
D. The auditor should analyze the list of destinations the department head visited to estimate typical costs.

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Question 81 Selectable Answer

When dealing with various stakeholders which of the following is true regarding an internal auditor's responsibility to remain objective and independent?

A. When deciding between conflicting reports of a control's performance from a control operator and the operator's manager the internal auditor should generally believe the manager
B. Some audit issues may remain unremediated and unreported if management will accept recommendations that the internal auditor deems more important
C. The internal auditor may initially disagree with management s acceptance of a risk, but reevaluate and agree with management’s judgment after further discussion
D. When working on business unit audits it is sometimes sufficient for the internal auditor to report deficiencies only to the unit manager when remediation is not complex

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Question 82 Selectable Answer

Which of the following is a responsibility of the internal audit activity as it relates to risk and risk management?

A. Evaluating and suggesting improvements to the risk management process.
B. Establishing the organization's risk appetite.
C. Determining whether the risk attitude is aligned with shareholder interests.
D. Ensuring an adequate risk management system is in place.

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Question 83 Selectable Answer

An electrician visits a client to assess the scope of work. After the visit, the sales office
compiles and sends the client a proposal based on the electrician's estimation and approved price list. The internal auditor notices that in the last six months, the number of cancelled proposals has increased substantially.
Which of the following is a fraud risk scenario that the auditor should consider in this situation?

A. Some electricians may be offering clients opportunities for reduced fees if they pay with cash.
B. There is a new competitor in the area who offers better prices.
C. Sales representatives may be manipulating the proposals to include additional costs.
D. An unauthorized person may be modifying client data and cancelling the proposals.

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Question 84 Selectable Answer

During the closing meeting of a procurement audit, the business manager disagrees with the observation presented by the engagement supervisor and accuses the team of not understanding the procurement objectives The engagement supervisor blames the manager for impeding the audit What skillset should the chief audit executive utilize to manage this situation?

A. The ability to negotiate
B. The ability to use analytical tools
C. The ability to foresee issues
D. The ability to manage conflict

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Question 85 Selectable Answer

Which of the following activities aligns with The IIA's Core Principles for the Professional Practice of Internal Auditing?

A. The chief audit executive reports to senior management for compensation decisions and communications of audit results to the board
B. Final reports from consulting engagements show the summary of findings, and the internal auditor’s advice is clearly distinct and separate from management's decisions
C. Internal auditors rotate through operations and management positions then perform audit engagements on these areas to ensure timely application of their knowledge
D. Due to limited resources, internal auditors prioritize assurance on internal controls and risk management and exclude evaluating governance processes, which are deemed outside of their core responsibilities

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Question 86 Selectable Answer

Which of the following scenarios would most likely impair the independence of an internal audit activity?

A. A relative of an internal audit team member works m a department being reviewed
B. The internal audit budget is reduced by management requiring the removal of all lT-related engagements from the audit plan
C. An audit manager removes a finding from the draft report due to disagreements with the chief financial officer
D. The operating effectiveness of a control is reported as 'satisfactory." because no concerns were identified during planning

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Question 87 Selectable Answer

When would on-the-job training be more effective?

A. When participants already have a certain degree of experience and knowledge.
B. When it makes up the largest part of the training budget.
C. When it includes ongoing feedback and coaching from experienced team members.
D. When it is standardized for the whole entire staff.

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Question 88 Selectable Answer

Which of the following is a true statement regarding controls such as ethical values, tone at the top and operational style?

A. Transaction testing, mapping and flowcharting is applicable while testing such controls
B. Breakdowns in the these types of controls have historically led to fraudulent financial reporting
C. Such controls can be defined as inherently ob)ective and tangible elements of control
D. From an audit perspective it is significantly easier to assess ethical values than segregation of duties

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Question 89 Selectable Answer

Which of the following must be in existence as a precondition to developing an effective system of internal controls?

A. A monitoring process,
B. A risk assessment process.
C. A strategic objective-setting process.
D. An information and communication process.

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Question 90 Selectable Answer

According to MA guidance, which of the following best describes how often the chief audit executive should review the quality assurance and improvement program of the internal audit activity?

A. Whenever the business objectives of the organization change
B. Just prior to an external assessment of the internal audit activity
C. At the completion of each engagement.
D. Progressively on a day-to-day basis

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