EMT Practice Test

1. Question Content...

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Question1: Who is responsible for ensuring internal auditors' continuing professional development?

Question2: According to the Standards, which of the following demonstrates the proficiency of an internal auditor?

Question3: Which of the following describes a primary responsibility for the internal audit activity in helping management maintain effective controls?

Question4: Which of the following is the best example of an ongoing independent monitoring activity'?

Question5: According to MA guidance, which of the following gives the internal audit activity the authority to request supporting documentation for the invoices of a third-party service provider?

Question6: Which of the following is most likely to be considered a control weakness?

Question7: Which of the following factors is most important for internal auditors to consider when prioritizing fraud risks?

Question8: Which of the following disclosures must the chief audit executive (CAE) include when communicating the results of the quality assurance and improvement program to senior management and the board?

Question9: Which of the following best demonstrates the authority of the internal audit activity?

Question10: Which of the following statements relating to risk management is true?

Question11: A chief audit executive (CAE) was asked by senior management to establish and manage a risk management function. A new chief risk officer was hired a year later to assume these responsibilities. As this function was included in the current annual audit plan, the CAE engaged an external resource for a risk management engagement. Which of the following potential threats to objectivity was the CAE likely addressing?

Question12: In an assurance engagement focused on the adequacy of organizationwide risk management practices, which of the following best describes a primary area of interest for the engagement?

Question13: Which of the following is an example of an impairment to an internal auditor's independence?

Question14: An internal auditor has completed an assurance engagement Which of the following is most likely true regarding the engagement?

Question15: 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.

Question16: An engagement supervisor noted that an internal auditor's personal relationship with a process owner resulted in the auditor providing a favorable and partial assessment during an audit within that process owner's are
a. According to MA guidance, which of the following should be used to manage this impairment?

Question17: 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?

Question18: Which of the following would be considered a monitoring activity in organization wide risk management?

Question19: Management has implemented a segregation-of-duties policy for handling inventory. Which of the following fraud risks would be more concerning to an internal auditor following the implementation of this new policy?

Question20: Which of the following is an example of a risk avoidance strategy?

Question21: An internal auditor is providing consulting services on an area he was responsible for three years ago. Part of the consulting scope covers a review of a performance measuring system that the auditor helped to develop. What is the best course of action for the auditor to take concerning the consulting service?

Question22: If an internal auditor suspects fraud during an engagement which of the following is expected of the auditor?

Question23: Management would like to self-assess the overall effectiveness of the controls in place for its 200-person manufacturing department. Which of the following client-facilitated approaches is likely to be the most efficient way to accomplish this objective?

Question24: Which of the following documents would promote objectivity within an organization's internal audit activity?

Question25: In which of the following situations would the organizational independence of an internal audit activity be impaired?

Question26: An internal auditor performed a consulting engagement last year which included assisting with management's design of controls over the procurement function. How should the chief audit executive plan an assurance engagement on the adequacy of the internal control system in the procurement function in the current year?

Question27: Which of the following is the primary engagement responsibility of an entry-level internal auditor?

Question28: Which of the following is true about a system of internal control?

Question29: Which of the following actions should the internal audit activity take during an audit engagement when examining the effectiveness of risk management processes?

Question30: Which of the following statements is true regarding control activities?

Question31: An internal audit activity is using the auditing-by-element approach to audit the organization's controls around corporate social responsibility. Which of the following would be an element for the internal audit activity to consider?

Question32: 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)?

Question33: Which principle of the HA Code of Ethics focuses on continuing education and professional development?

Question34: Which of the following best describes the internal audit activity's contribution to the implementation of the risk management framework?

Question35: Which of the following is true regarding the use of a formal risk management framework?
1. It facilitates a methodical approach to risk mitigation.
2. It defines and standardizes the terminology used in risk communication.
3. It establishes the risk tolerance levels to be accommodated in the strategy.
4. It facilitates the alignment of risk mitigation strategies with management priorities.

Question36: According to IIA guidance, which of the following actions is a chief audit executive required to take with regard to reporting the results of the quality assurance and improvement program?

Question37: An organization's senior management team is awarding substantial bonuses if employees meet financial targets. Which of the following motivators to potentially commit fraud would become most likely in this scenario?

Question38: According to The IIA's Code of Ethics, which of the following statements is true?

Question39: Which of the following would be a red flag for potential issues in the control environment?

Question40: In which of the following scenarios would the chief audit executive (CAE) be required to decline the assignment?

Question41: Which of the following is an example of an entity-level control pertaining to the finance area of an organization'?

Question42: Which of the following would be considered advanced expertise which most internal auditors are not expected to possess'?

Question43: Which competency is required of all staff internal auditors prior to the commencement of an IT audit?

Question44: An internal auditor is assessing fraud risks and creating a fraud risk matrix for a particular branch location. Which of the following is most likely to be included in the matrix?

Question45: As a result of a high-profile processing error, respective business unit managers are implementing new controls. The internal audit team was asked for their advice regarding the controls. The objective of this consulting engagement would be determined by which of the following?

Question46: Which of the following is the best way for an internal auditor to demonstrate due professional care?

Question47: Which of the following statements is the most appropriate for a chief audit executive to include in the internal audit policy manual in order to promote objectivity?

Question48: To assure that the technical proficiency of internal auditors is appropriate for the audit engagements to be performed, a chief audit executive should:

Question49: 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?

Question50: Which of the following statements is true regarding the internal audit activity's quality assurance and improvement program (QAIP)?

Question51: Which of the following must be in existence as a precondition to developing an effective system of internal controls?

Question52: According to IIA guidance, which of the following is true of the internal audit activity's quality assurance and improvement program?
1 Monitoring the internal audit activity's performance must be ongoing
2 All aspects of the internal audit activity should be evaluated
3 The requirement for external assessments can be satisfied through self-assessments that are validated by an independent external party
4 The review of assurance services should be the primary focus

Question53: Which of the following statements best describes the difference between risk appetite and risk tolerance?

Question54: An internal auditor was offered expensive tickets to a sporting event by the manager of an area that she was currently auditing. The auditor politely declined. Which of the following fundamental principles ot the MA Code of Ethics did she display?

Question55: Which of the following activities best demonstrates an internal auditor's commitment to developing professional competencies?

Question56: At a conference, an interna! auditor presented a new computer-assisted audit technique developed by his organization. The presentation included sample data derived from performing audit engagements for the organization. Travel costs were paid by the conference organizers, and the trip was approved by the chief audit executive (CAE).
However, neither management nor the CAE was aware that the internal auditor would be making a presentation based on work completed for the organization. According to IIA guidance, which of the following statements is most relevant regarding the actions of the auditor?

Question57: Which of the following best describes a responsibility of the board of directors with regard to risk management throughout the organization?

Question58: According to IIA guidance, which of the following actions by a new chief audit executive would be most appropriate to gain an understanding of the current level of knowledge, skills, and competencies required by an internal audit activity to fulfill its responsibilities?

Question59: Which of the following is an example of risk monitoring to ensure a system is performing as intended?

Question60: An internal auditor observed that sales staff are able to modify or cancel an order in the system prior to shipping* She wonders whether they can also modify orders after shipping. Which of the following types of controls should she examine?

Question61: An organization's fraud policies and procedures dictate that the internal audit activity does not have primary responsibility for conducting fraud investigations and should, in fact, refrain from involvement in investigations. Which of the following activities would be considered acceptable for internal auditors to perform of this organization?

Question62: Which of the following is a true statement regarding controls such as ethical values, tone at the top and operational style?

Question63: According to NA guidance, which of the following actions by the chief audit executive would best ensure that internal auditors demonstrate due professional care?

Question64: Which of the following situations presents the lowest risk of impairing an internal audit activity's independence?

Question65: According to NA guidance, which of the following is true regarding typical fraud schemes?
1. A diversion occurs when an employee has an undisclosed personal economic interest in a transaction that adversely affects
the organization.
2. Tax evasion is intentional reporting of false or misleading information on a tax return by an organization to reduce taxes owed.
3. Skimming involves stealing cash or assets from the organization and is normally concealed by adjusting the organization's
records.
4, Disbursement fraud occurs when a person causes the organization to issue a payment for fictitious goods or services.

Question66: Which of the following skills is most important for an internal auditor who facilitates control self-assessment workshops to possess?

Question67: Which of the following statements best demonstrates application of due professional care during an assurance engagement?

Question68: Which of the following best demonstrates conformance with the Standards relating to continuing professional development of internal auditors?

Question69: According to the Standards, which of the following is a requirement for internal audit professional development plans?

Question70: Which of the following statements is most likely to be true regarding a consulting engagement involving an organization's new payroll system?

Question71: Which of the following would be considered an indicator that an organization's ethics program is not yet well developed?

Question72: Which of the following written documents typically offers the best evidence that internal auditors exercise due professional care in conformance with the Standards?

Question73: A third-party provider's questionable labor practices have exposed the organization to reputational risks and regulatory risks. Which of the organization's risk management practices was most likely ineffective?

Question74: Which of the following statements is most accurate with respect to the required elements of the quality assurance and improvement program?

Question75: Which of the following statements is true regarding the independent peer review process undertaken to fulfill the requirement for an external quality assessment?

Question76: Which of the following statements is true regarding control activities'?

Question77: Which of the following situations undermines the independence of the internal audit activity?

Question78: According to IIA guidance, which of the following best describes expense reimbursement fraud'?

Question79: During an assurance engagement, an internal auditor uses benchmarking research to support preparation of a report to stakeholders that contains significant findings about control deficiencies. Which of the following skills did the auditor demonstrate?

Question80: Which of the following is an advantage of using nongovernmental organization (NGO) members on an assurance team when auditing corporate social responsibility?

Question81: To encourage internal audit objectivity, which of the following is an appropriate policy the chief audit executive should establish?

Question82: The internal audit activity is undergoing a self-assessment as part of its quality assurance and improvement program Which of the following observations must be addressed in order for the internal audit activity to achieve conformance with the Standards?

Question83: Which of the following statements would typically be included in the responsibility section of the internal audit charter?

Question84: Which of the following is considered to be a threat to the internal auditor's objectivity?

Question85: An internal audit activity includes in its audit reports the assertion that its work is performed in conformance with the International Standards for the Professional Practice of Internal Auditing ( Standards). A recent external quality assessment concluded that the internal audit activity had substantial deficiencies that impact its overall operations.
According to IIA guidance, which of the following is the most appropriate action for issuing future audit reports?

Question86: Due to the increased operational responsibility of the CEO the chief audit executive (CAE) of an organization currently reports to the chief financial officer (CFO) What is the likely impact of such a situation?

Question87: The manager of the payroll department requested a review of the payroll process, but only wants the engagement to include processes related to approval of time worked. What type of activity is this?

Question88: Which of the following is the most appropriate way to ensure that a newly formed internal audit activity remains free from undue influence by management?

Question89: According to NA guidance, which of the following practices by the chief audit executive (CAE) best enhances the organizational independence of the internal audit activity?

Question90: During an audit of company expenses, the internal auditor performed a test using data analytics and identified a violation of the company's expenses policy. The auditor who discovered the issue considered it a potential fraudulent transaction and informed the chief financial officer (CFO). The CFO dismissed the concern because he did not understand the data analytics test that was performed and the transaction was of a low value. Given this situation, which skills or competencies should this internal auditor seek to improve?

Question91: Which of the following statements is correct regarding disclosure of conformance or nonconformance with the Standards?

Question92: In a small organization, management is unable to achieve adequate segregation of duties for its cash-handling procedures Therefore hidden surveillance cameras were installed to monitor cash-handling activities Which of the following best describes this type of control?

Question93: Which of the following would the chief audit executive be required to disclose in the communication of quality assessment results to senior management and the board?

Question94: Which of the following should be implemented to promote independence of the internal audit activity?

Question95: Which of the following best describes the type of organizational culture known as adaptability culture'?

Question96: The internal audit activity was asked to conduct an investigation for potential fraud in the treasury department and subsequently contracted with a forensic accountant to join the team for the engagement. Which of the following parties has the primary responsibility for resolving any fraud incidents found as a result of this investigation?

Question97: During the audit of taxation processes in the organization internal auditors have verified that all employees of the finance department received training on taxation guidelines. The training is mandatory and is automatically assigned via email invitation to all new employees in the department Which type of controls have the auditors tested?

Question98: 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?

Question99: Which of the following statements is true regarding corporate social responsibility (CSR)?

Question100: An organization's operations management is aware of existing internal control deficiencies but they lack the competency to execute internal control measures. Which of the following actions if taken by the internal audit activity is appropriate to assist operating management in achieving continuous improvement on internal controls?

Question101: Which of the following processes does the board manage to ensure adequate governance?

Question102: Which of the following is an example of a directive control?

Question103: Which of the following would be considered a violation of The HAfs mandatory guidance on independence?

Question104: According to IIA guidance, which of the following statements is true regarding the internal audit activity's responsibilities in providing consulting services?

Question105: Applying ISO 31000, which of the following is part of the external context for risk management?

Question106: Which of the following would be the best choice for a continuing professional development requirement for a newly created internal audit activity?

Question107: Which type of engagement requires that the client agrees with the techniques used by the internal audit activity?

Question108: Which of the following scenarios would most significantly restrict the areas where interna! audit could perform assurance services?

Question109: 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?

Question110: Which of the following statements is true regarding internal controls?

Question111: A newly appointed chief audit executive (CAE) started analyzing the organization's policies in an attempt to customize them to address internal audit specifics. Which of the following organizationwide practices is most likely to be acceptable to the CAE?

Question112: 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?

Question113: In the COSO internal control framework, which of the following components serves as the foundation for the other components?

Question114: A chief audit executive assigned an internal auditor to perform an assurance engagement. The auditor concluded with a major audit finding based on hearsay evidence Which of the following competencies did the auditor appear to be lacking?

Question115: Which of the following best describes a purpose for the internal audit charter?

Question116: An internal audit activity maintains a quality assurance and improvement program that includes annual self-assessments. The internal audit activity includes in each engagement report a clause that the engagement is conducted in conformance with the International! Standards for the Professional Practice of Internal Auditing (Standards). Which of the following justifies inclusion of this clause in the reports?

Question117: The internal audit activity is performing an assessment of an organization's ethics program, and the engagement scope specifies a focus on the training program's design. According to IIA guidance, which of the following questions would be the most relevant?
1. Does the training include situations that require an ethical decision?
2. What percentage of employees have taken the training?
3. What are the results of the employee assessment of the organization's ethical climate?
4. Does the instructor provide feedback on the thought process to reach an ethical resolution?

Question118: An accounts payable clerk has recently transferred Into the internal audit activity and has been assigned to an engagement related to accounts payable processes for which he was previously responsible Which of the following is the best action for the new internal auditor to take?

Question119: According to IIA guidance, which of the following is the primary reason the chief audit executive discusses the internal audit charter with senior management and the board?

Question120: Which of the following scenarios best demonstrates the application of internal audit proficiency?

Question121: 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?

Question122: Which of the following is true for consulting engagements'?

Question123: The internal audit activity audited an organization's risk management function multiple times, and the recommendations that were made remain unaddressed by the head of risk management. Which of the following would be the next step for the internal audit activity?

Question124: According to MA guidance, which of the following statements is true regarding an effective governance process?

Question125: Which of the following statements best describes how the internal audit activity obtains reasonable assurance that significant risks in the organization are identified and assessed?

Question126: A multinational organization has asked the internal audit activity to assist in setting up the organization's risk management system. The chief audit executive (CAE) agrees to take on the engagement as a consultant. Which of the following tasks is appropriate for the CAE to undertake?

Question127: Which of the following statements is true with regard to services provided by the internal audit activity?

Question128: The chief audit executive (CAE) has assigned an internal auditor to an upcoming engagement. Which of the following requirements would most likely indicate that the internal auditor was assigned to an assurance engagement?

Question129: Which of the following is a consulting service the internal audit activity can perform with respect to the organization's risk management'?

Question130: Which of the following types of policies best helps promote objectivity in the interna! audit activity's work?

Question131: An internal auditor is finalizing an audit report on the effectiveness of the organization's overall system of internal control. Several audit tests were performed, and the only issue identified was that the CEO frequently asks employees to make exceptions or bypass the organization's standard written policies and procedures. Which of the following conclusions is most appropriate for the auditor to report?

Question132: Which of the following best describes the Standards requirement for collective proficiency of the internal audit activity?

Question133: Operational management in the IT department has developed key performance indicator reports, which are reviewed in detail during monthly staff meetings. This activity is designed to prevent which of the following conditions?

Question134: In its five years of existence, an internal audit activity conducted a single internal assessment of its quality assurance and improvement program (QAIP). The results of that assessment showed that the internal audit activity did not conform with the Standards. Prior to this, an external assessment of the internal audit activity's QAIP was conducted, which reported that the internal audit activity was in conformance with the Standards. Considering the two assessments, what would be the internal audit activity's current state of conformance with the Standards?

Question135: Which of the following is the best example of a risk appetite statement concerning an investment portfolio?

Question136: Who is held responsible for oversight of the organization's risk management framework?

Question137: According to NA guidance which of the following should be documented in the internal audit chatter?

Question138: In which of the following audits would the internal auditors most likely contribute to the assessment of organizational governance?

Question139: At what point in time can an organization conclude that the established organizational governance framework was correctly implemented?

Question140: Which of the following would be the most suitable internal control framework for an organization to adopt?

Question141: 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?

Question142: Which of the following is an example of a risk reduction strategy?

Question143: Which of the following statements best describes internal auditors' role in fraud detection?

Question144: An automobile manufacturer will become one of the first in the industry to adopt a new inventory management software. Despite the system being new to the market, senior management believes that the benefits are great enough to offset the potential risks. Which of the following aspects of risk management does senior management's decision best illustrate?

Question145: According to MA guidance, which of the following is the most accurate statement regarding the internal audit charter?

Question146: Which of the following is most accurate concerning corporate social responsibility?

Question147: Which of the following internal control components has COSO identified as the most important?

Question148: According to ISO 31000, which of the following statements is correct?

Question149: During a complex financial compliance engagement, a senior internal auditor determines that current audit procedures are not sufficient for adequate testing She consults with a colleague and learns that a spreadsheet application contains a helpful tool She proceeds to use the tool to properly complete the evaluation Which of the following best describes the core competency displayed by the senior auditor?

Question150: Which of the following statements is true regarding management's use of judgement to design, implement, and conduct internal control?