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Question 91 Selectable Answer

In which of the following scenarios would it be appropriate for the chief audit executive (CAE) to report that the internal audit activity conforms with the Standards?

A. It A new internal audit activity was formed four years ago. An external assessment was never performed, but successive internal assessments were performed and support the conclusion that the internal audit activity conforms with the Standards
B. An internal self-assessment completed yesterday found that the internal audit activity did not conform with the Standards when carrying out its work. However, the preceding independent external assessment supports the conclusion that the internal audit activity conforms with the Standards.
C. To reduce costs, the CAE excluded the use of external assessors from the internal audit activity's quality assurance and improvement program for the past seven years. However, the CAE concluded that the internal audit activity conforms with the Standards because all internal assessments over the period have supported this conclusion.
D. The results of the last external assessment of the internal audit activity, performed a little over five years ago, indicated that the internal audit activity conforms with the Standards. The most recent internal assessment performed within the past year also indicates conformance.

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Question 92 Selectable Answer

An internal auditor assessed that the risk of steel theft at a plant is high. In response, the plant's management introduced a number of controls, including fences around the facility, a metal detector at the entrance, and monthly steel inventory counts. If the controls operate as intended, which of the following outcomes would the internal auditor hope to see?

A. The inherent risk will be mitigated to a level lower than the residual risk.
B. The inherent risk will be reduced to an acceptable level.
C. The residual risk will be reduced to an acceptable level.
D. The residual risk will be eliminated

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Question 93 Selectable Answer

According to IIA guidance, which of the following statements is true regarding mentoring programs designed to assist internal auditors with their professional development?

A. The mentor must have a higher position in the organization than the mentee
B. An auditor s supervisor is best positioned to serve as the auditor's mentor
C. Meetings between a mentor and a mentee should be formal and well documented
D. Auditors at the same level may be assigned different mentors and some auditors may have no mentor

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Question 94 Selectable Answer

Which of the following scenarios best illustrates due professional care?

A. An internal auditor who previously worked in the payroll department within the last year was intentionally excluded by the chief audit executive from the audit team assigned to a payroll audit
B. While performing a payroll audit an auditor became skeptical about significant payments made to a manager. The auditor sought to determine whether these payments were reasonable through discussion with a manager in a different department in the organization
C. The head of the payroll department being audited is a business partner of the engagement supervisor During the audit the engagement supervisor sought to maintain his objectivity by not participating in fieldwork
D. An auditor assigned to a payroll audit was unable to reperform some complex payroll computations for a small number of employees The sum of these payments was below the materiality thresholds provided so the auditor did not perform further tests

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Question 95 Selectable Answer

A newly hired internal auditor is performing an engagement that requires significant IT expertise that he does not possess. If the auditor does not alert the chief audit executive about his lack of expertise and decides to perform the engagement anyhow, which principle of the IIA's Code of Ethics would he violate?

A. Due professional care.
B. Competency.
C. Effective communication
D. Professionalism

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Question 96 Selectable Answer

An internal audit of an organization's disbursement department revealed that multiple payments were made to legitimate vendors bearing fraudulent banking information belonging lo employees in the department. These vendors were initially set up with accurate banking information but were subsequently modified by disbursement officers with access to the vendor management system.
Which of the following controls would have likely prevented the fraudulent modification of vendors' banking information?

A. Management periodically reviews and verifies the information in the vendor master Tile.
B. Management's approval is required for update to vendors' banking information.
C. Management randomly audits a sample of payments to verify the accuracy of vendors' banking information.
D. Management's approval is required before payments can be processed.

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Question 97 Selectable Answer

According to IIA guidance, which of the following statements is true regarding ISO 31000?

A. The key principles approach checks whether each element of the risk management process is in place.
B. The framework is effective in addressing the organization's structure, size, and risk profile but not its culture objectives.
C. The end point for improving an organization s approach to risk management should be a gap analysis that evaluates any changes.
D. A combination of the three primary approaches to the framework generally yields the most information despite the complexity

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Question 98 Selectable Answer

According to IIA guidance, which of the following best demonstrates that the chief audit executive is properly reporting the results of the quality assurance and improvement program to senior management and the board?

A. Providing a written conformance statement to both senior management and the board.
B. Giving copies of both external and internal assessments to the board.
C. Keeping files of reports of ongoing external assessment monitoring.
D. Retaining copies of board meeting minutes showing that discussions of assessments took place.

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Question 99 Selectable Answer

An organization's board recommends revising the internal audit charter by adding requirements regarding the hiring and compensation of the chief audit executive as well as information on approving the internal audit budget.
Which of the following is the board most likely defining in the charter?

A. Functional and administrative responsibilities of internal audit activity.
B. Authority and objectivity of internal audit activity.
C. Independence and objectivity of internal audit activity.
D. Assurance and improvement of internal audit activity.

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Question 100 Selectable Answer

Which of the following is a legitimate requirement for an internal audit activity’s quality assurance and improvement program (QAIP)?

A. Quality assessments should be performed by individuals with sufficient knowledge of the internal audit practices
B. External quality assessments should be conducted every seven years
C. All quality assessments should be either conducted or validated by an independent assessment team
D. The results of the QAIP should be communicated to shareholders annually

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Question 101 Selectable Answer

An internal audit team was assigned to review the organization’s information security protocol After fieldwork was completed an internal auditor identified an error in the review of security access The error could affect the overall results of the engagement Which of the following is the most appropriate course of action for the internal auditor?

A. Proceed with addressing the error and report any corrections to the engagement supervisor during the scheduled exit meeting
B. Issue the audit report to senior management on schedule but include a disclaimer about the error
C. Proceed with the scheduled closing of the engagement without consideration of the identified error
D. Inform the engagement supervisor of the error and allow the supervisor to determine the appropriate action to take

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Question 102 Selectable Answer

The head of human resources notified the internal audit activity that a key account manager was fired because he did not register a large number of contracts with clients As a result the organization was unaware of its duties and would suffer some financial loss Which of the following should be expected from a competent internal auditor who is analyzing this situation?

A. The ability to apply forensic methods to obtain legally admissible evidence
B. The ability to conduct admission-seeking interviews with potential suspects
C. The ability to evaluate whether such attributes as intent and personal gain were present
D. The ability to retrieve concealed or deleted information from the former employee's laptop

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Question 103 Selectable Answer

Who has the ultimate responsibility of implementing the organization’s governance system?

A. Stakeholders
B. The board
C. The chief executive officer
D. Internal auditors

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Question 104 Selectable Answer

Which of the following should catch the internal auditor's attention as a potential red flag for fraud?

A. The accounting unit keeps detailed records and preserves supporting documentation in excess of company requirements
B. One of the subsidiaries has more bank accounts than any other comparable subsidiary
C. The same external audit firm has been with the company for three years without rotation
D. The arithmetic median tenure of employees working at production facilities is 15 years

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Question 105 Selectable Answer

To achieve conformance with the Standards, the chief audit executive must include which of the following activities in the quality assurance and improvement program (QAIP)?

A. Require board oversight of the QAI
B. Assess Standards conformance for each individual engagement.
C. Conduct a self assessment at least once every five years.
D. Report the results of the QAIP to senior management

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