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Internal Audit Fundamentals

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Question # 16

Which of the following procedures will best help an internal auditor assess operating effectiveness of fraud prevention and detection controls?

Options:

A.  

Benchmarking best practices

B.  

Testing,

C.  

Mapping,

D.  

Interviewing

Discussion 0
Question # 17

The board requested the chief audit executive (CAE) to provide consulting services for a new systems implementation project Which of the following statements is true regarding this scenario?

Options:

A.  

The CAE should avoid making decisions on risk responses within risk management processes.

B.  

The CAE may only provide consulting and not assurance services in risk management processes

C.  

The CAE may manage the project risks on behalf of management in this particular situation

D.  

The CAE should avoid giving assurance on risk management processes in this particular situation

Discussion 0
Question # 18

Which of the following situations is most likely to heighten an internal auditor ' s professional skepticism regarding potential fraud?

Options:

A.  

A procurement manager does not have the expected academic credentials for his position.

B.  

A salesperson frequently complains about the organization ' s policy on sales commissions.

C.  

The accounts payable supervisor has requested advances against her monthly salary on several occasions.

D.  

A financial accountant is absent from work frequently due to regular medical procedures.

Discussion 0
Question # 19

An organization has limited resources to spend on corporate social responsibility initiatives. Which is the most suitable approach to determine how these resources should be used?

Options:

A.  

Support a mix of environmental economic and social initiatives to ensure a balanced approach is taken

B.  

Survey employees and external stakeholders to see which causes are best suited to the organization.

C.  

Select corporate social responsibility initiatives that support the overall strategic goals of the organization

D.  

Conduct a financial analysis to determine where the most impact can be made with the budget available

Discussion 0
Question # 20

Which of the following resources would be most effective for an organization that would like to improve how it informs stakeholders of its social responsibility performance?

Options:

A.  

ISO 26000.

B.  

Global Reporting Initiative.

C.  

Open Compliance and Ethics Group.

D.  

COSO’s enterprise risk management framework

Discussion 0
Question # 21

Which of the following statements is true with regard to services provided by the internal audit activity?

Options:

A.  

For consulting engagements, internal auditors do not need to be alert to control issues.

B.  

Assurance and consulting services have similar objectives.

C.  

Internal auditors may not perform assurance and consulting roles at the same time.

D.  

Both assurance and consulting engagements require a final engagement report

Discussion 0
Question # 22

According to IIA guidance, which of the following statements is true of assurance services provided by the internal audit activity?

Options:

A.  

Internal auditors cannot assess an operation for which they were responsible within the previous year.

B.  

Management of the area under review must agree with the engagement objectives, scope, and techniques.

C.  

The engagement results will vary in form and content depending upon the needs and wishes of the engagement client.

D.  

The only parties involved in the engagement are the internal auditor and management of the area under review.

Discussion 0
Question # 23

Which of the following would be considered a monitoring activity in organization wide risk management?

Options:

A.  

Validate the results of management ' s self-assessment.

B.  

Perform reviews of personnel.

C.  

Maintain rigorous and comprehensive documentation.

D.  

Obtain authorizations and signatures.

Discussion 0
Question # 24

In order for an internal auditor to assess the opportunity for fraud to occur in an organization, which of the following does the auditor first need to understand?

Options:

A.  

Fraud prevention.

B.  

Fraud detection.

C.  

Corporate culture.

D.  

Forensic analysis techniques.

Discussion 0
Question # 25

Senior management relies on the professional judgment of an internal auditor and uses outcomes of her audit work to make business decisions Which of the following personal qualities displayed by the internal auditor is most likely the foundation for this relationship?

Options:

A.  

Integrity

B.  

Negotiation skills.

C.  

Business acumen

D.  

Flexibility

Discussion 0
Question # 26

According to IIA guidance, which of the following activities is appropriate for an internal auditor to perform with regard to the organization ' s corporate social responsibility (CSR) program?

1. Determine whether the organization has adequate controls to achieve its CSR objectives.

2. Facilitate a management self-assessment of CSR controls and results.

3. Consult on the project design and implementation for the CSR program.

4. Exclude CSR-related external risks that are beyond the control of the organization.

Options:

A.  

1 and 2 only.

B.  

1, 2 and 3 only.

C.  

2, 3, and 4 only.

D.  

3 and 4 only.

Discussion 0
Question # 27

How should the internal audit activity promote continuous improvement of organizational controls?

Options:

A.  

By assessing implementation of controls m individual processes during audit engagements

B.  

By identifying the most significant business processes and designing effective controls for those processes

C.  

By implementing an internationally accepted internal control framework across the organization

D.  

By facilitating control self-assessment sessions for managers responsible for business processes

Discussion 0
Question # 28

An organization allows the same individual to physically access inventory and purchase new assets when supplies are depleted. Which of the following would best help the organization manage the risk of fraud?

Options:

A.  

Accounting personnel should regularly perform a reconciliation between invoices and purchase orders.

B.  

Accounting personnel should conduct a periodic inventory count and reconcile all inventory movements.

C.  

Internal auditors should review the frequency and volume of purchased assets to detect trends in the inventory levels.

D.  

Management should establish a policy requiring new inventory asset purchases to be made on serialized order forms with copies retained.

Discussion 0
Question # 29

In which of the following situations would the organizational independence of an internal audit activity be impaired?

Options:

A.  

The chief audit executive reports administratively to the CEO.

B.  

Scope limitations are imposed on internal audits.

C.  

The internal audit activity provides assurance services for an activity for which the engagement supervisor had responsibility within the previous year.

D.  

The compensation committee of the board approves the remuneration of the chief audit executive.

Discussion 0
Question # 30

Which of the following best describes the differences between internal auditors and external auditors?

Options:

A.  

External auditors are concerned about misstatements in the organization ' s financial statements, while internal auditors are concerned about fraudulent activities that could impact the organization’s financial statements

B.  

External auditors are required to hold an accounting designation and are responsible for continuing their education, while internal auditors are required to hold an internal audit designation.

C.  

External auditors focus on the accuracy and understandability of financial statements, while internal auditors help the organization accomplish its objectives by evaluating and improving the effectiveness of the control process.

D.  

External auditors are not employees of the organization, while internal auditors are employees who have in-depth knowledge of the business, making their opinion more reliable to the board and senior management.

Discussion 0
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