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NEW QUESTION # 110
Which of the following best describes the primary concern of the audit manager upon review of engagement working papers of an auditor?
- A. To ensure that as part of the documentation the auditor collected original documents that can corroborate the audit findings.
- B. To ensure adequate control over the custody of working papers is exercised by the auditor.
- C. To ensure that the work papers create background for subsequent reviews.
- D. To ensure that the audit programs are followed by the auditor.
Answer: D
Explanation:
Section: Volume C
NEW QUESTION # 111
Which role is not considered a change agent when an organization wants to implement structural changes?
- A. Line management.
- B. Independent consultant.
- C. Shareholder.
- D. Senior management.
Answer: C
NEW QUESTION # 112
After issuance of the engagement final communication for an audit of an organization's accounts payable function, which of the following should be sent satisfaction surveys?
I.Manager of disbursements.
II.
Controller.
III.
Chief operating officer.
IV.
- A. II, III, and IV only.
Audit committee members. - B. II and III only.
- C. I and II only.
- D. I only.
Answer: C
NEW QUESTION # 113
Which of the following is not a primary purpose for conducting a walk-through during the initial stages of an assurance engagement?
- A. To identify residual risks.
- B. To help develop process maps.
- C. To test the adequacy of controls.
- D. To determine segregation of duties.
Answer: C
Explanation:
Section: Volume E
NEW QUESTION # 114
Which of the following tasks would be considered unusual for planning a control self-assessment workshop?
- A. Ensuring that managers are willing to accept constructive criticism.
- B. Conducting interviews to identify relevant issues for the discussion.
- C. Identifying key stakeholders and ensuring they are represented in the group.
- D. Securing an external subject matter expert to arbitrate disputes.
Answer: D
Explanation:
Section: Volume C
NEW QUESTION # 115
What would be used to determine the collectability of accounts receivable balances?
- A. The file of related shipping documents.
- B. An aged accounts receivable listing.
- C. Negative accounts receivable confirmations.
- D. Positive accounts receivable confirmations.
Answer: B
NEW QUESTION # 116
The audit committee has asked the chief audit executive (CAE) to conduct an ad hoc forensic investigation of the purchasing department within a month due to the significance and urgency of a recently discovered risk The internal audit activity currently has no available staff with relevant experience or qualifications Which of the following is the CAE's best option for fulfilling the internal audit activity's responsibilities in this case?
- A. Decline the engagement at this time
- B. Select certain internal auditors and remove them from their current assignments so that they can begin a forensic investigation course
- C. Recruit additional internal auditors possessing relevant qualification and experience
- D. Outsource the investigation to independent professional consultants
Answer: A
NEW QUESTION # 117
Which of the following audit techniques provides for continuous monitoring and analysis of computer transactions for detailed auditing?
- A. Integrated test facility.
- B. Test data.
- C. Parallel simulation.
- D. Embedded audit routines.
Answer: D
Explanation:
Section: Volume A
NEW QUESTION # 118
A large investment organization hired a chief risk officer (CRO) to be responsible for the organization's risk management processes. Which of the following people should prioritize risks to be used for the audit plan?
- A. The chief audit executive, although he is not accountable for risk management in the organization.
- B. The CEO, because he has ultimate responsibility for ensuring that risks are managed within the agreed tolerance limits set by the board.
- C. Operational management, because they are responsible for the day-to-day management of the operational risks.
- D. The CRO, because he is responsible for coordinating and project managing risk activities based on his specialized skills and knowledge.
Answer: A
NEW QUESTION # 119
An auditor evaluating excessive product rejection rates should investigatE.
I.
Communication between sales and production departments on sales returns.
II.
Volume of product sales year-to-date in comparison to prior year-to-date.
III.
Changes in credit ratings of customers versus sales to those customers.
IV.
Detailed product scrap accounts and accumulations.
- A. I, II, III, and IV.
- B. I and III only
- C. II, III, and IV only
- D. I and IV only
Answer: D
NEW QUESTION # 120
An organization does not have a formal risk management function. According to the Standards, which of the following are conditions where the internal audit activity (IAA) may provide risk management consulting?
1. There is a clear strategy and timeline to migrate risk management responsibility back to management.
2. The IAA has the final approval on any risk management decisions.
3. The IAA does not give objective assurance on any part of the risk management framework for which it is responsible.
4. The nature of services provided to the organization is documented in the internal audit charter.
- A. 1, 2, and 3 only
- B. 1, 3, and 4 only
- C. 2, 3, and 4 only
- D. 1, 2, and 4 only
Answer: B
NEW QUESTION # 121
In a payroll audit, a staff auditor suspects that signatures on some of the documents being sampled for examination are not authentic. What action should the auditor take before proceeding with the examination?
- A. Review the suspicious documents with the chief audit executive and seek advice concerning further examination.
- B. Suggest to the payroll manager that the suspicious documents should be sent to the organization's security department for forensic review.
- C. Discuss the suspicious documents with payroll staff to seek their views on the authenticity of the signatures.
- D. Keep the suspicious documents in the workpaper file until the end of the engagement, and then discuss the suspicions with the payroll manager.
Answer: A
NEW QUESTION # 122
Direct staff as a percentage of total staff is an example of which of the following types of efficiency measures?
- A. Resource utilization rate.
- B. Productivity index.
- C. Productivity ratio.
- D. Operating ratio.
Answer: D
NEW QUESTION # 123
When establishing a quality assurance and improvement program, the chief audit executive should ensure the program is designed to accomplish which of the following objectives?
1. Add value.
2. Improve operations.
3. Provide assurance that the internal audit activity conforms with the Standards.
4. Provide assurance that the internal audit activity conforms with the IIA Code of Ethics.
- A. 1 and 2 only
- B. 1 and 3 only
- C. 1, 2, 3, and 4
- D. 1 only
Answer: C
Explanation:
Section: Volume E
Explanation/Reference:
NEW QUESTION # 124
An audit of customer accounts receivable found that outstanding receivables as a percentage of revenue had increased significantly during the past two years. The increase was attributed to the extension of credit, at the urging of the marketing department, to a number of companies that were not creditworthy. Which of the following would be least useful in monitoring the disposition of this finding?
- A. Information from the credit and marketing personnel assigned the responsibility for reevaluating credit policies.
- B. Updates from the information technology division regarding implementation of a new accounts receivable system.
- C. Responses from the manager of accounts receivable regarding collection of outstanding receivables.
- D. Periodic updates from the controller regarding the status of corrective actions.
Answer: B
NEW QUESTION # 125
According to the Standards, which of the following should be the basis for scheduling follow-up of engagement recommendations?
- A. The internal audit charter.
- B. The risks and exposures involved.
- C. The follow-up manual procedures.
- D. The agreement made between internal auditors and management.
Answer: B
NEW QUESTION # 126
Which of the following best describes the four components of a balanced scorecard?
- A. Customers, innovation, growth, and internal processes.
- B. Business objectives, critical success factors, innovation, and growth.
- C. Financial measures, learning and growth, customers, and internal processes.
- D. Customers, support, critical success factors, and learning.
Answer: C
NEW QUESTION # 127
Which of the following audit procedures is most suitable for verifying that all sales transactions have been recorded?
- A. Vouching.
- B. Tracing.
- C. Recomputation.
- D. Observation.
Answer: B
NEW QUESTION # 128
The chief audit executive (CAE) is adding a new audit position to the team. According to the International Professional Practices Framework, which of the following candidates would the CAE be least likely to accept for the position?
- A. The candidate is applying for an IT audit position, while originally coming from an IT background, but has only experiences of financial and compliance audits in the previous position.
- B. The candidate provides examples of previous reports demonstrating excellent writing skills, but lacks ability to clearly communicate ideas and conclusions in a meeting.
- C. The candidate is knowledgeable about potential indicators of fraud including typical risks, but has only participated as a staff auditor in one investigative fraud audit.
- D. The candidate meets the minimum educational requirements established by the chief audit executive, but has less formal education than any of the other candidates being considered.
Answer: B
NEW QUESTION # 129
The best method for assessing the relative importance of risk factors is to:
- A. Change the rating of the factors from a 1-3 scale to a 1-5 scale.
- B. Assign weights to the factors based on the comparative impact.
- C. Use data from an independent source.
- D. List the risk factors in a priority order.
Answer: B
NEW QUESTION # 130
An organization has a large number of vendors supplying goods to its various branches across the region. The code of conduct statements signed by the employees specify that the employees or their families will not sell goods to the organization. However, during the internal audit of a branch, the internal auditor suspected that some of the employees may be supplying goods to the organization contrary to the code of conduct. The chief audit executive has requested that a thorough review be completed to identify the potential employee vendors. Of the following tests, it would be least useful to compare [List A] with [List B].
[List A]
[List B]
- A. Addresses of vendors from the vendor database Addresses of employees from the employee database D .Vendor names Employee names
- B. Dates of payments to vendors Dates of salary payments to employees
- C. Vendor bank account numbers Employee bank account numbers
Answer: B
NEW QUESTION # 131
The internal audit activity can be involved with systems development continuously, immediately prior to implementation, after implementation, or not at all. An advantage of continuous internal audit involvement compared to the other types of involvement is that:
- A. There are clearly defined points at which to issue audit comments.
- B. Redesign costs can be minimized.
- C. The threat of lack of audit independence can be minimized.
- D. The cost of audit involvement can be minimized.
Answer: B
NEW QUESTION # 132
Because of a new marketing initiative, an organization has reduced requirements for extending credit to new customers. As a result, outstanding accounts receivable as a percentage of revenue has increased significantly during the past two years. Which of the following would be least useful in monitoring this finding?
- A. Updates from the information technology division regarding development of a new accounts receivable system.
- B. Updates from the credit and marketing personnel tasked with reevaluating credit policies.
- C. Updates from the controller regarding the status of corrective actions.
- D. Updates from the manager of accounts receivable regarding collection of outstanding receivables.
Answer: A
Explanation:
Section: Volume C
NEW QUESTION # 133
A corporate merger decision prompts the chief audit executive (CAE) lo propose interim changes to the existing annual audit plan to account for emerging risks Which of the following is the most appropriate action for the CAE to take regarding the changes made to the audit plan''
- A. Present the revised audit plan directly to the CEO for approval
- B. Communicate with the CEO and present the revised audit plan to the board for approval.
- C. Communicate with the chief financial officer and present the revised audit plan to the CEO tor approval
- D. Present the revised audit plan directly to the board for approval.
Answer: C
NEW QUESTION # 134
In a client satisfaction survey for an internal audit engagement, client management should be asked to assess which of the following factors?
I. Audit team's knowledge of the audited area.
II. Usefulness of the audit results.
III. Quality of management of the internal audit activity.
IV.
Clarity of the scope and objectives of the audit engagement.
- A. I and II only
- B. II and IV only
- C. I, II, and IV only
- D. I, III, and IV only
Answer: C
NEW QUESTION # 135
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