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Internal Audit Fundamentals

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Question # 166

Which of the following is a primary responsibility of senior management with respect to ethical violations?

Options:

A.  

Senior management provides oversight for the organization's ethical climate.

B.  

Senior management promotes an ethical culture in the organization.

C.  

Senior management assesses the effectiveness of the organization’s ethical programs.

D.  

Senior management reviews major ethical policies in the organization for compliance

Discussion 0
Question # 167

Which of the following characteristics is typical of the internal audit activity?

Options:

A.  

Serves third parties that need reliable financial information from audit engagements

B.  

Responds to the needs and desires of senior management and the board, but remains independent of areas under review

C.  

Ensures the organization complies with laws and regulations in the area under review

D.  

Is completely independent of senior management, the board and the area under review

Discussion 0
Question # 168

The chief audit executive of an organization assigns audit resources to undertake a consulting engagement requested by senior management the previous year, and a scheduled assurance audit of the procurement process Which of the following appropriately differentiates the two engagements?

Options:

A.  

The details of assurance services are expected to be included in the risk-based audit plan; this is not the case for consulting services.

B.  

The objectivity of assurance services is impaired when undertaken by internal auditors who have had recent prior responsibility in the area under review; this is not the case for consulting services

C.  

The performance of assurance services may be outsourced for competency gaps: this is not the case for consulting services.

D.  

The results of assurance services are required to be monitored; this is not the case for consulting services

Discussion 0
Question # 169

Which of the following is a strategic risk that internal auditors should consider when performing a third-party risk management engagement?

Options:

A.  

Physical security

B.  

Loss of intellectual property

C.  

Cost overruns

D.  

Conflict of interest

Discussion 0
Question # 170

Which of the following is the primary benefit of an effective professional development program for internal auditors?

Options:

A.  

An effective program may enhance internal auditors' business acumen

B.  

An effective program may ensure that HA Standards requirements are adhered to during audit engagements

C.  

An effective program may ensure internal auditors' effectiveness in setting the organization's nsk management process

D.  

An effective program may clarify management's expectations of the auditors and their responsibilities to the organization

Discussion 0
Question # 171

In which scenario might it be considered problematic for the chief audit executive (CAE) to provide assurance services over the payroll function?

Options:

A.  

The CAE previously undertook a consulting assignment in that area to improve processes,

B.  

A couple of years ago, the CAE performed accounting functions for the payroll department.

C.  

Prior to becoming the CAE, the CAE was the payroll manager.

D.  

The assurance review was initiated following issues identified during a consulting assignment requested by management.

Discussion 0
Question # 172

Considering the concepts of organization wide risk management and the system of internal controls, the internal audit activity as a whole can be considered which of the following types of control?

Options:

A.  

Transaction-level control.

B.  

Management-oversight control.

C.  

Governance control.

D.  

Process-level control.

Discussion 0
Question # 173

Which of the following documents would promote objectivity within an organization's internal audit activity?

Options:

A.  

Internal audit charter.

B.  

Internal audit manual.

C.  

Audit committee charter

D.  

Human resources employee handbook.

Discussion 0
Question # 174

According to The IIA's Competency Framework, which competency is considered the mandatory minimum for internal auditors to possess when performing internal audit engagements?

Options:

A.  

To recognize red flags that indicate fraud.

B.  

To recommend controls to prevent fraud.

C.  

To apply forensic auditing techniques to detect fraud.

D.  

To evaluate the potential for fraud.

Discussion 0
Question # 175

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?

Options:

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

Discussion 0
Question # 176

Which of the following best describes the risk created when a manager bypasses organizational policies and procedures in order to meet an organization’s objective?

Options:

A.  

Accountability/reward risk.

B.  

Monitoring failure risk.

C.  

Communication failure risk.

D.  

Knowledge/skills risk

Discussion 0
Question # 177

Which of the following activities best ensures that internal auditors grow professionally in alignment with current industry trends to meet the expectations of primary stakeholders?

Options:

A.  

Deploying self-assessments against a competency benchmark.

B.  

Acquiring memberships in professional organizations.

C.  

Developing professional succession plans.

D.  

Obtaining subscriptions to professional journals in their area of interest.

Discussion 0
Question # 178

According to MA guidance, which of the following statements is true regarding an effective governance process?

Options:

A.  

It stipulates that risk needs to be considered when making strategic decisions.

B.  

It encourages strict segregation of the risk management and internal control processes.

C.  

It relies on effective risk management when establishing the organization's risk appetite.

D.  

It relies on the board to devise ways to communicate the effectiveness of internal controls.

Discussion 0
Question # 179

In the COSO internal control framework, which of the following components serves as the foundation for the other components?

Options:

A.  

Control activities.

B.  

Control environment.

C.  

Risk assessment.

D.  

Monitoring

Discussion 0
Question # 180

An internal audit team analyzed the organization's value-at-risk model during an assurance engagement and suggested several useful improvements. Management was impressed by the internal audit team’s work and requested additional actions. Which of the following requested actions would impact internal audit independence most severely if fulfilled?

Options:

A.  

Assess the effectiveness of the model at least semi-annually.

B.  

Modify model inputs and suggest courses of action based on outcomes.

C.  

Employ acquired experience to test other models used by the company.

D.  

Validate whether model outputs serve the purpose stated by the model.

Discussion 0
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