EMT Practice Test

1. Question Content...

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Question1: Which of the following audit procedures is most suitable for verifying that all sales transactions have been recorded?

Question2: An audit of an organization's fulfillment department discovered that problems in the order processing system led to a significant number of orders being fulfilled multiple times. During the exit conference, the head of the department informed the auditors that the processing system would be enhanced within six months to correct the problems. Which course of action should the chief audit executive follow?

Question3: Which of the following is the most important determinant of the objectives and scope of assurance engagements?

Question4: A draft internal audit report that cites deficient conditions generally should be reviewed with which of the following groups?
1. The client manager and her superior.
2. Anyone who may object to the report's validity.
3. Anyone required to take action.
4. The same individuals who receive the final report.

Question5: What is the most likely source of information for a detailed schedule of a company's insurance policies in force?

Question6: An auditor is using an internal control questionnaire as part of a preliminary survey. Which of the following is the best reason for the auditor to interview management regarding the questionnaire responses?

Question7: An audit department has received anonymous information that an employee has allegedly been able to steal and cash checks sent to the organization by customers. What is the most efficient way for an auditor to determine how this type of fraud could occur and who might be the perpetrator?

Question8: The chief audit executive established an internal audit activity (IAA) performance standard requiring all audit reports to be issued within 48 hours of the exit meeting with the client. Which of the following describes an exit meeting strategy that would best help the IAA meet this performance standard?

Question9: Which of the following reasonably represents best practices regarding what should be the level of internal audit resource investment in monitoring and following up on engagement outcomes?

Question10: An internal auditor observes a double payment transaction on a supplier invoice during an accounts payable engagement Which of the following steps would be the most effective in helping the auditor determine whether fraud exists?

Question11: A chief audit executive (CAE) reviews the supervision of an internal audit engagement Which of the following would most likely assure the CAE that the engagement had adequate supervision?

Question12: Which of the following is the correct ratio to use in calculating the dollar value of the population if the auditor is using ratio estimation?
Number of Items
Audited Value
Carrying Amount
Sample
300
$500,000
$480,000
Population
3,000
$5,000,000

Question13: Which of the following methods would an auditor most likely use to document a complex sales order process?

Question14: A recent survey indicated that residents of a small town take the train to a nearby city eight times per month, on average. The same survey showed that the number of train trips that a resident takes per month (y) is determined by the number of days per month that the resident works in the nearby city (x), according to the equation: y = 2 + 2x. A person who never works in the nearby city is expected to take the train:

Question15: According to the Standards, which of the following is an attribute when applied to the observations and recommendations contained in the audit report?

Question16: In an organization with a large internal audit activity that has several audit teams performing engagements simultaneously which of the following tasks is an engagement supervisor most likely to perform during the planning phase of a new engagement?

Question17: According to IIA guidance, which of the following are potential benefits of using an assurance map?

Question18: As part of an operational audit of the shipping department, an auditor selected a sample of 45 daily shipping logs from the department's files. On 44 of the days, the log contained a sufficient number of shipments to meet the department's daily quota. Based on this test, the auditor concluded that the shipping department was effective at meeting its quotas. Which of the following is true about the auditor's conclusion?

Question19: An internal auditor is discussing an audit problem with an engagement client. While listening to the client, the internal auditor should:

Question20: At a construction company, an internal auditor is planning an audit of the company's process for designing and building grid connections The process involves customers making payments m three parts
* The first payment of 10% after approval of the customer s application
* The second payment of 70% prior to construction
* The third payment of 20% after construction is complete
Which of the following key controls should the auditor test to ensure that the company is not taking any unwanted credit risks?

Question21: Which of the following is an advantage to using the questionnaire approach when conducting risk and control self assessments?

Question22: An internal auditor is conducting an assessment of the organization's fraud controls. Which of the following would not be considered a preventive control?
1. Daily report that identifies unsuccessful system log-in attempts.
2. Weekly management communication with tips on identifying possible fraud.
3. E-mail alert sent to management for checks issued over $100,000.00.
4. New hire training to explain fraud and employee misconduct.

Question23: Which of the following recommendations made by the internal audit activity (IAA) is most likely to help prevent fraud?

Question24: The final engagement communication contains the following observation:
The internal auditor discovered that three of the 10 contracts reviewed failed to meet the organization's competitive bidding requirements Management explained that senior management deemed these purchases to be critical and awarded them as sole-source." Which of the following components is missing in the documentation of the observation?

Question25: If the chief audit executive believes that senior management has accepted a level of residual risk that is unacceptable to the organization, they should:

Question26: Management has taken immediate action to address an observation received during an audit of the organization's manufacturing process Which of the following is true regarding the validity of the observation closure?

Question27: Which of the following would be an appropriate improvement to controls over large quantities of consumable material that are charged to expense when placed in bins which are accessible to production workers?

Question28: When interviewing an individual in relation to a fraud investigation, which course of action should the internal auditor follow?

Question29: A code of business conduct should include which of the following to increase its deterrent effect?
1. Appropriate descriptions of penalties for misconduct.
2. A notification that code of conduct violations may lead to criminal prosecution.
3. A description of violations that injure the interests of the employer.
4. A list of employees covered by the code of conduct.

Question30: 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''

Question31: Recommendations should be included in the audit report in order to:

Question32: Which of the following statements is true pertaining to interviewing a fraud suspect?
1. Information gathered can be subjective as well as objective to be useful.
2. The primary objective is to obtain a voluntary written confession.
3. The interviewer is likely to begin the interview with open-ended questions.
4. Video recordings always should be used to provide the highest quality evidence.

Question33: When establishing the internal audit activity's annual plan, which of the following would be the best source of potential audit engagement topics?

Question34: Which of the following is least likely to help ensure that risk is considered in a work program?

Question35: To which of the following aspects should the chief audit executive give the most consideration while communicating an identified unacceptable risk to management?

Question36: The following are potential sources of evidence regarding the effectiveness of a division's total quality management program. The least persuasive evidence would be a comparison of:

Question37: Checklists used to assess audit risk have been criticized for all of the following reasons except:

Question38: If management expects 100 percent compliance with a procedure, which of the following sampling approaches would be most appropriate?

Question39: During an information security audit, an auditor discovers that the current disaster recovery plan was developed three years ago but never tested. There have been significant changes to information systems since the plan was developed. The auditor should:

Question40: Which of the following documents should the chief audit executive review and approve?
1. Workpaper retention policy.
2. Audit committee meeting minutes.
3. Internal audit handbook.
4. Quarterly financial statements.

Question41: According to HA guidance, the chief audit executive is directly responsible for which of the following?

Question42: Which of the following factors should a chief audit executive consider when determining the audit universe?
1. Components of the organization's strategic plan.
2. Inputs from senior management and the board.
3. Views of competitors and business associates.
4. Results of exit interviews with departing employees.

Question43: Which of the following would be a legitimate action for the internal auditor to take when monitoring audit engagement results?
1. Disregard a certain risk because management and the board accepted the risk in the past.
2. Abdicate the responsibility for a particular risk because it is not part of the audit plan.
3. Obtain agreement from senior management that unresolved audit issues will be reported to the board. Request corrective action from management in writing.

Question44: After concluding a preliminary assessment, the engagement supervisor prepared a draft work program According to HA guidance which of the following would be tested by this program?

Question45: Which of the following statements is true regarding engagement planning?

Question46: Which of the following best describes the four components of a balanced scorecard?

Question47: An internal auditor has been asked to participate in an advisory capacity to assist a committee in redesigning the organization's current financial reports to provide better information to management and the board. Which of the following actions on the part of the auditor would provide the greatest value to this project?

Question48: Which of the following is a preventive control strategy against fraud?

Question49: Which of the following would most likely include recommendations for process improvements?
* Due diligence engagement.
* Forensic investigation.
* Internal audit engagement.
* Consulting engagement.

Question50: According to the International Professional Practices Framework, the responsibility for establishing and maintaining a system to monitor the disposition of results communicated to management falls upon:

Question51: Which of the following tasks would be considered unusual for planning a control self-assessment workshop?

Question52: An internal auditor is planning an assurance engagement. The auditor first reviews the department's business objectives. What is the next step?

Question53: A key to effective benchmarking in a consulting engagement is identifying the issues that can be:

Question54: Which of the following is an appropriate responsibility for the internal audit activity with regard to the organization's risk management program?

Question55: The internal audit activity of an investment company received a request to provide assurance on the risk management process. Preliminary discussion with senior management revealed that separate functions within the organization perform some form of risk management activities. Which of the following is the most effective tool for ensuring that risk management activities are coordinated among these functions?

Question56: The chief audit executive can illustrate the value of the internal audit activity by reporting which of the following to the board?

Question57: According to HA guidance, which of the following is the Key planning step internal auditors should perform to establish appropriate engagement objectives prior to starting an audit engagement?

Question58: Which of the following, if observed, would not indicate the need to extend the search for other indicators of fraud in a purchasing department?

Question59: An internal auditor recommended that an organization implement computerized controls in its sales system in order to prevent sales representatives from executing contracts in excess of their delegated authority levels. A follow-up review found that the sales system had not been modified, but a process had been implemented to obtain written approval by the vice president of sales for all contracts in excess of $1 million. The chief audit executive (CAE) would be justified in reporting this situation to the organization's board iF.
I.
In the opinion of the CAE, the level of residual risk assumed by senior management is too high.
II.
Testing of compliance with the new process finds that all new contracts in excess of $1 million have been approved by the vice president of sales.
III.
The cost of modifying the sales system to include a preventive control is less than $100,000.

Question60: An internal audit manager is planning a contract compliance audit Which of the following should be done prior to developing the audit work program?

Question61: Which of the following factors would increase the confidence level in a variables sampling plan?
1. A larger sample size.
2. A stratified sample.
3. A larger standard deviation.

Question62: An organization has an opening for an entry-level internal audit position. When interviewing for the position, which of the following is the least important skill for an entry-level internal auditor?

Question63: A staff auditor, nearly finished with an audit engagement, discovers that the director of marketing has a gambling habit. The gambling issue is not directly related to the existing engagement and there is pressure to complete the current engagement. The auditor notes the problem and forwards the information to the chief audit executive but performs no further follow-up. The auditor's actions woulD.
I.
Be in violation of the IIA Code of Ethics for withholding meaningful information.
II.
Be in violation of the Standards because the auditor did not properly follow up on a red flag that might indicate the existence of fraud.
III.
Not be in violation of either the IIA Code of Ethics or Standards.

Question64: Which of the following would be the most important reason for the chief audit executive (CAE) to use inputs from management strategy to update the audit universe?

Question65: In which of the following cases is it appropriate for an audit report to not contain management's response either within the report or as an attachment?

Question66: According to IIA guidance, which of the following activities is most likely to enhance stakeholders' perception of the value the internal audit activity (IAA) adds to the organization?
1. The IAA uses computer-assisted audit techniques and IT applications.
2. The IAA uses a consistent risk-based approach in both its planning and engagement execution.
3. The IAA demonstrates the ability to build strong and constructive relationships with audit clients.
4. The IAA frequently is involved in various project teams and task forces in an advisory capacity.

Question67: The chief executive officer has requested that the chief audit executive (CAE) coordinate the establishment of an enterprise risk management (ERM) program for the organization. Which of the following would be the most appropriate action for the CAE?

Question68: If participants in a control self-assessment workshop begin breaking their agreed-upon ground rules, the facilitator should:

Question69: Which of the following is an advantage of control self-assessment (CSA) over conventional auditing techniques?

Question70: Which of the following situations would best support the decision of a chief audit executive (CAE) to defer follow-up activity at a branch office until the next audit engagement?

Question71: Which of the following would most likely contribute to discrepancies between receiving reports and the number of units in a shipment?

Question72: According to IIA guidance, which of the following is true regarding the exit conference for an internal audit engagement?

Question73: Which of the following statements is correct regarding the assessment of risk in the annual audit planning process?
1. Activities requested by management should be considered higher risk than those requested by the audit committee.
2. Activities with lower budgets can be as high risk as those with higher budgets.
3. The potential financial or adverse exposure should always be considered in the assessment of risk.

Question74: An audit of a company's accounts payable found that the individuals responsible for maintaining the vendor master file could also enter vendor invoices into the accounts payable system. During the exit conference, management agreed to correct this problem. When performing a follow-up engagement of accounts payable, the auditor should expect to find that management has:

Question75: In performance auditing, which of the following must first be determined by the internal auditor?

Question76: Which of the following data collection strategies systematically tests the effects of various factors on an outcome?

Question77: Which of the following is most appropriate when conducting an interview during the course of a fraud investigation?

Question78: Which of the following situations is most critical for the chief audit executive to report to the board?

Question79: An organization decides to create an internal audit function and hires a new chief audit executive (CAE). Which of the following should the CAE first consider when developing the internal audit process?

Question80: Which of the following is a responsibility of the internal auditor once a fraud investigation has been concluded?

Question81: Due to a recent system upgrade, an audit is planned to test the payroll process. Which of the following audit objectives would be most important to prevent fraud?

Question82: Which of the following tasks is typically performed in the analysis phase of a benchmarking consulting engagement?

Question83: An organization's policies allow buyers to authorize expenditures up to $50,000 without any other approval. Which of the following audit procedures would be most effective in determining if fraud in the form of payments to fictitious companies has occurred?

Question84: An internal auditor notes that employees continue to violate segregation-of-duty controls in several areas of the finance department, despite previous audit recommendations. Which of the following recommendations is the most appropriate to address this concern?

Question85: Due to price risk from the foreign currency purchase of aviation fuel, an airliner has purchased forward contracts to hedge against fluctuations in the exchange rate. When recalculating the exchange losses from individual purchases of jet fuel, which of the following details does the internal auditor need to validate?
1. The hedge documentation designating the hedge.
2. The spot exchange rate on the transaction date.
3. The terms of the forward contract.
4. The amount of fuel purchased.

Question86: Which of the following would be an appropriate and effective control self-assessment approach in an organization with an authoritative culture?
1. Facilitated meeting
2. Survey
3. Management-produced analysis

Question87: Which of the following types of internal audit consulting engagements is an example of a facilitation service?
1. Conducting control self-assessment workshops.
2. Participating on standing committees.
3. Reviewing regulatory compliance.
4. Benchmarking.
5. Estimating savings from outsourcing processes.

Question88: Given the scarcity of internal audit resources, a chief audit executive (CAE) decides not to schedule a follow-up of audit recommendations when developing engagement work schedules. Why does the CAE's decision violate the Standards?

Question89: According to IIA guidance, which of the following should be considered when creating policies and procedures for the internal audit activity (IAA)?

Question90: During an interview with a manager in a company's claims department, an auditor noted that the manager became nervous and changed the subject whenever the auditor raised questions about certain types of claims. The manager's answers were consistent with company policies and procedures. When documenting the interview, the auditor should:

Question91: After the team member who specialized in fraud investigations left the internal audit team, the chief audit executive decided to outsource fraud investigations to a third party service provider on an as needed basis. Which of the following is most likely to be a disadvantage of this outsourcing decision?

Question92: Reviewing internal audit report drafts with clients is:
1. Required according to the Standards.
2. A form of courtesy.
3. Ethically mandated.
4. A form of validation.

Question93: During an assurance engagement, an internal auditor discovered that a sales manager approved numerous sales contracts for values exceeding his authorization limit. The auditor reported the finding to the audit supervisor, noting that the sales manager had additional new contracts under negotiation. According to IIA guidance, which of the following would be the most appropriate next step?

Question94: According to the International Professional Practices Framework, which of the following situations is an indicator of a healthy relationship between the audit committee and the internal audit function?

Question95: Which of the following examples of audit evidence is the most persuasive?

Question96: The chief audit executive (CAE) notes during review of the final report of an assurance engagement that management has decided to accept the risks of two significant exposures identified by the audit. Which of the following actions by the CAE would be least prudent in these circumstances?

Question97: A retail company uses a computer program that matches electronic vendor invoices with the applicable purchase orders and receiving information, which are also maintained electronically.
If an invoice does not match the other items within predefined ranges, a report is generated and sent to the accounts payable department for further investigation. All of the applicable documents are electronically marked, cross-referenced, and retained in open files. Both an integrated test facility and a systems control audit review file (SCARF) have been included in the system.
An auditor wants to determine the extent to which items are not matched at year end and to investigate the potential causes of the unmatched items. Which of the following audit procedures would be most effective in determining the items to investigate?

Question98: Inadequate risk assessment would have the strongest negative impact in which of the following phases of an audit engagement?

Question99: A chief audit executive has noticed that staff auditors are presenting more oral reports to supplement written reports. The best reason for the increased use of oral reports is that they:

Question100: What is the primary purpose of issuing a preliminary communication to management of the area under review?

Question101: According to the Standards, which of the following is least important in determining the adequacy of an annual audit plan?

Question102: Because of an abundance of high priority requests from management, an internal audit activity no longer has the resources to meet all of its commitments contained in the annual audit plan. Which of the following would be the best course of action for the chief audit executive to follow?

Question103: Which of the following statements is true regarding internal auditors and other assurance providers?

Question104: Which of the following is most likely to be judged as a significant residual risk that would exceed the organization's acceptable risk level?

Question105: Which of the following statements is true regarding the communication of audit engagement observations?

Question106: An internal auditor has a recommendation to change operations which could potentially increase profits by $50,000. The best way to sell this recommendation to management is to:

Question107: According to the International Professional Practices Framework, which of the following statements is correct regarding the communication of audit results?
1. Summary reports may be issued separately from or in conjunction with the final report.
2. Interim reports may be written or oral.
3. Detailed reports should always be issued to the audit committee.
4. Interim reports should be used to communicate information which requires immediate attention.

Question108: According to IIA guidance, which of the following accurately describes the responsibilities of the chief audit executive with respect to the final audit report?
1. Coordinate post-engagement conferences to discuss the final audit report with management.
2. Include management's responses in the final audit report.
3. Review and approve the final audit report.
4. Determine who will receive the final audit report.

Question109: Which of the following should be the focus of the effect section of the preliminary observations document?

Question110: Which of the following best defines an engagement conclusion?

Question111: New environmental regulations require the board to certify that the organization's reported pollutant emissions data is accurate. The chief audit executive (CAE) is planning an audit to provide assurance over the organization's compliance with the environmental regulations. Which of the following groups or individuals is most important for the CAE to consult to determine the scope of the audit?

Question112: When approving the final engagement report, which of the following is most critical?

Question113: According to the International Professional Practices Framework, which of the following statements is true regarding the use of the statement, "Conducted in Conformance with the International Standards for the Professional Practice of Internal Auditing," when communicating results of a seven-year-old internal audit activity?

Question114: During an audit of an ethics program, which of the following procedures are most appropriate to evaluate the effectiveness of the program?
* Testing whether corrective actions taken on involved parties breaching the ethics program are adequate.
* Testing whether all employees are mandated through policy to comply with the ethics program.
* Testing whether all employees are required to confirm in writing their compliance with the ethics program.
* Testing through surveys employee's level of understanding and commitment to the ethics program.

Question115: The chief audit executive (CAE) of a small internal audit activity (IAA) plans to test conformance with the Standards through a quality assurance review. According to the Standards, which of the following are acceptable practice for this review?
1. Use an external service provider.
2. Conduct a self-assessment with independent validation.
3. Arrange for a review by qualified employees outside of the IAA.
4. Arrange for reciprocal peer review with another CAE.

Question116: According to IIA guidance, which of the following factors should the auditor in charge consider when determining the resource requirements for an audit engagement?

Question117: When interviewing an individual suspected of fraud, what type of questions would be asked after the introductory questions?

Question118: According to IIA guidance, which of the following statements are true regarding the internal audit plan?
1. The audit plan is based on an assessment of risks to the organization.
2. The audit plan is designed to determine the effectiveness of the organization's risk management process.
3. The audit plan is developed by senior management of the organization.
4. The audit plan is aligned with the organization's goals.

Question119: When determining the nature, timing, and extent of follow up, the chief audit executive considers all of the following factors except:

Question120: During the development of a purchasing system, an auditor reviewed the payment authorization program. Which of the following actions should the auditor recommend for a situation in which the quantity invoiced is greater than the quantity received?

Question121: According to the International Professional Practices Framework, which of the following should be excluded from a final communication for a performance audit engagement?

Question122: While conducting an audit of a third party's Web-based payment processor, an internal auditor discovers that a programming error allows customers to create multiple accounts for a single mailing address. Management agrees to correct the program and notify customers with multiple accounts that the accounts will be consolidated. Which of the following actions should the auditor take?
1. Schedule a follow-up review to verify that the program was corrected and the accounts were consolidated.
2. Evaluate the adequacy and effectiveness of the corrective action proposed by management.
3. Amend the scope of the subsequent audit to verify that the program was corrected and that accounts were consolidated.
4. Submit management's plan of action to the external auditors for additional review.

Question123: According to HA guidance, which of the following statements regarding audit workpapers is true?

Question124: An internal auditor was reviewing the procurement department's tender documentation for completeness He documented all discrepancies but the procurement manager disagreed with his findings Upon further review, the internal auditor noted that all discrepancies had been corrected in the tender database. Which of the following courses of action would have prevented this situation?

Question125: A manufacturing organization is considering a merger with a similar firm, and requests that the chief audit executive (CAE) perform a due diligence audit. During the preliminary survey, the CAE notes that inventory management is a high risk area. In consultation with the external auditors and legal advisors, the CAE learns that they share those concerns. Which of the following is the CAE's best course of action?

Question126: An internal auditor is testing the success of the IT support department in meeting the service levels guaranteed to small, medium and large customers. The customer's size classification is based on its annual expenditures with the organization and the nature and extent of services it receives. Which of the following sampling techniques would be the most suitable to select customers for this test?

Question127: Which of the following types of contracts would provide the least incentive for a contractor to achieve economy and efficiency?

Question128: While conducting a payroll audit, an internal auditor in a large government organization found inadequate segregation in the duties assigned to the assistant director of personnel. When the auditor explained the risk of fraud, the assistant director became upset, terminated the interview, and threatened to sue the organization for defamation of character if the audit engagement was not curtailed. The auditor discussed the situation with the chief audit executive (CAE). The CAE should then:

Question129: An internal auditor is conducting an assessment of the purchasing department. She has worked the full amount of hours budgeted for the engagement; however, the audit objectives are not yet complete. According to IIA guidance, which of the following are appropriate options available to the chief audit executive?
1. Allow the auditor to decide whether to extend the audit engagement.
2. Determine whether the work already completed is sufficient to conclude the engagement.
3. Provide the auditor feedback on areas of improvement for future engagements.
4. Provide the auditor with instructions and directions to complete the audit.

Question130: In evaluating the validity of different types of audit evidence, which of the following conclusions is not correct?

Question131: According to IIA guidance, which of the following strategies would be the least effective in helping a chief audit executive build a stronger relationship with the board?

Question132: What is the primary purpose of creating a preliminary draft audit report?

Question133: During an audit of the accounts receivable (AR) process, an internal auditor noted that reconciliations are still not performed regularly by the AR staff, a recommendation that was made following a previous audit. Monitoring by the financial reporting function has failed to detect the shortcoming. Both the financial reporting function and AR report to the controller, who is responsible for implementing action plans. Which of the following supports the internal auditor's decision to combine both observations into one reported finding?

Question134: When me internal audit activity does not have sufficient time to complete its usual root cause analysis which c4 the following is most appropriate?

Question135: After finalizing an assurance engagement concerning safety operations in the oil mining process, the audit team concluded that no key controls were compromised. However, some opportunities for improvement were noted. Which of the following would be the most appropriate way for the chief audit executive (CAE) to report these results?

Question136: While investigating a compromised Web server, an auditor found that the Web server logs had been deleted. The auditor should recommend that the Web server logs be:

Question137: As part of a preliminary survey of the purchasing function, an internal auditor reads the department's policies and procedures manual and concludes that the manual describes the processing steps clearly and contains an appropriate internal control design. The next engagement objective is to evaluate the operating effectiveness of internal controls. Which procedure would fulfill this objective most effectively?

Question138: Which of the following would provide the greatest assurance of the accuracy of a computer program's computation of freight charges for catalog sales?

Question139: An organization has a mature control environment but limited internal audit resources Given this scenario, on which of the following should the internal auditors focus their testing?

Question140: Which of the following is a preventive control for fraud?

Question141: According to IIA guidance, which of the following procedures would be least effective in managing the risk of payroll fraud?

Question142: The chief audit executive (CAE) determined that based on management's oral response, the action taken regarding an audit observation was sufficient when weighted against the relative importance of the audit recommendation. Which of the following is the most appropriate step for the internal auditor to take next?

Question143: The internal audit activity has adopted the balanced scorecard approach to assess its performance According to MA guidance which of the following is a key performance indicator relevant to the audit client?

Question144: If an auditor used nonstatistical sampling instead of statistical sampling to estimate the value of inventory, which of the following would be true?

Question145: Which of the following is a weakness that is inherent in the use of the test data method to test internal controls in a computer-based accounting system?

Question146: Which of the following would have the least significance in an audit of the efficiency of a driver's license testing facility?

Question147: When conducting audit follow-up of a finding related to cash management routines, an internal auditor would expect to find that all of the following changes have occurred except:

Question148: Which of the following would not be an appropriate step for an internal auditor to perform during an assessment of compliance with an organization's privacy policy?

Question149: In advance of a preliminary survey, a chief audit executive sends a memorandum and questionnaire to the supervisors of the department to be audited. What is the most likely result of that procedure?

Question150: A report prepared by the internal audit activity contains several observations that disclose proprietary information regarding the organization's manufacturing process. According to the International Professional Practices Framework, which of the following is the appropriate treatment for this report?

Question151: After completing a net present value (NPV) calculation on a proposed project, an analyst explores the change in NPV with changes in the interest rate. This additional analysis is referred to as:

Question152: 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?

Question153: If an auditor expects to find numerous discrepancies between recorded values and audited values of sample selections, which sampling technique would be most appropriate?

Question154: A newly appointed chief audit executive (CAE) of a small organization is developing a resource management plan Which of the following approaches would be most beneficial to help the CAE obtain details of the Internal audit activity's collective knowledge skills, and other competencies?

Question155: In a health care organization the internal audit activity provides overall assurance on governance, risk and control The chief audit executive advises and influences senior management, and the audit strategy leverages the organization's management of risk According to HA guidance which of the following stages of internal audit maturity best describes this organization?

Question156: Which of the following would be included in an internal audit department's quality assurance and improvement program?
1. Ongoing internal assessments of the performance of the internal audit department.
2. Periodic internal reviews through self-assessments.
3. Assessments conducted by a qualified external reviewer at least once every five years.

Question157: A code of business conduct provides:

Question158: 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?
1. Manager of disbursements.
2. Controller.
3. Chief operating officer.
4. Audit committee members.

Question159: An auditor plans to analyze customer satisfaction, including: (1) customer complaints recorded by the customer service department during the last three months; (2) merchandise returned in the last three months; and (3) responses to a survey of customers who made purchases in the last three months. Which of the following statements regarding this audit approach is correct?

Question160: What decision-making approach should a facilitator initiate if a group addresses an unfamiliar situation during a control self-assessment session?

Question161: To effectively communicate the acceptance of risk in an organization a chief audit executive must first consider which of the following?

Question162: A code of ethics within the internal auditing profession is necessary in order to:

Question163: Which of the following situations might allow an employee to steal checks sent to an organization and subsequently cash them?

Question164: Which of the following is true regarding roles and responsibilities in risk management processes?

Question165: Which of the following would present the most critical external risk to an organization?

Question166: According to IIA guidance, which of the following statements is true regarding the authority of the chief audit executive (CAE) to release previous audit reports to outside parties?

Question167: Which of the following should be included in a privacy audit engagement?
1. Assess the appropriateness of the information gathered.
2. Review the methods used to collect information.
3. Consider whether the information collected is in compliance with applicable laws.
4. Determine how the information is stored.

Question168: Under what circumstances would internal audit not become involved when intentional misconduct is suspected?

Question169: Which of the following behaviors could represent a significant ethical risk if exhibited by an organization's board?
1. Intervening during an audit involving ethical wrongdoing.
2. Discussing periodic reports of ethical breaches.
3. Authorizing an investigation of an unsafe product.
4. Negotiating a settlement of an employee claim for personal damages.

Question170: Which of the following has the greatest effect on the efficiency of an audit?

Question171: An appliance repair company is considering relocating the center that houses its service vehicles. An internal auditor wants to determine the potential reduction in average miles driven by the service vehicles if the center is relocated. Which of the following statistical sampling methods would be most appropriate for this test?

Question172: Which of the following statements is true regarding the final assurance engagement report issued to management?

Question173: An audit client responded to recommendations from a recent consulting engagement. The client indicated that several recommended process improvements would not be implemented. Which of the following actions should the internal audit activity take in response?

Question174: The internal audit activity of an organization obtained approval to add a senior auditor to its staff. The chief audit executive, audit manager, and audit supervisor each will interview the candidates. According to the Standards, which of the following best explains the involvement of management in the interview process?

Question175: An internal auditor is conducting an initial risk assessment of an audit area and wants to assess management's compliance with privacy laws for safeguarding customer information stored on the organization's servers Which course of action is appropriate for this phase of the engagement?

Question176: In order to effectively elicit sensitive information from an employee during an audit engagement, an auditor should:

Question177: An internal auditor receives a document displaying all the steps of a process and the path taken as transactions flow between each step of the process How is the internal auditor most likely to use This document during the engagement?

Question178: Which of the following statements is false regarding audit criteria?

Question179: Which of the following statements is true?

Question180: According to the Standards, which of the following should be the basis for scheduling follow-up of engagement recommendations?

Question181: After partially completing an internal control review of the accounts payable department, an auditor suspects that some type of fraud has occurred. To ascertain whether the fraud is present, the best sampling approach would be to use.

Question182: Which of the following statements is true regarding internal control questionnaires?

Question183: Which of the following is the best problem-solving technique to use when analyzing performance and cost?

Question184: Which of the following computerized audit tools or techniques should be used if the internal auditor wants to extract specific files and records in the database?

Question185: New credit policies have been implemented in an automated order-entry system to improve the collection of receivables. Sales management has compiled several examples that show decreased sales and delayed order entry, and contends that these examples are a direct result of the new credit-policy constraints. Sales management's data and information provide.

Question186: The most effective procedure to verify compliance with a requirement that materials be purchased from the lowest-priced source is to compare:

Question187: An internal auditor submitted a report containing recommendations for management to enhance internal controls related to investments. To follow up, which of the following is the most appropriate action for the internal auditor to take?

Question188: A payroll clerk enters payroll transactions into the general ledger. The staff accountant reconciles the payroll ledgers. The payroll manager issues the manual payroll checks. The checks are maintained in a locked cabinet. The chief financial officer secures the keys to the cabinet. The payroll clerk distributes the manual checks.
The payroll manager reconciles the bank statements monthly. Which of the following audit steps best addresses the risk of fraud in the payroll process?

Question189: Which of the following is not a reason for an internal auditor to prepare an audit plan before the detailed audit work begins?

Question190: In which of the following situations would it be most appropriate to employ the services of a forensic specialist?

Question191: An auditor-in-charge is preparing her audit team for a consulting engagement at one of the organization's foreign subsidiaries. According to the Standards, which of the following would not be a necessary step prior to beginning the engagement?

Question192: A chief audit executive (CAE) received a detailed internal report of senior management's internal control assessment. Which of the following subsequent actions by the CAE would provide the greatest assurance over management's assertions?

Question193: Which of the following risks assumes an absence of compensating controls in the area being reviewed?

Question194: Which of the following trends found on financial reports would most likely indicate a possible problem?

Question195: During an audit of a branch bank, an internal auditor learned that a series of system failures had resulted in a four-day delay in processing customers' scheduled payroll direct deposits. The first failure was that of a disk drive, followed by software and other minor failures. Which of the following controls should the auditor recommend to avoid similar delays in processing?

Question196: When planning an audit engagement, what should an internal auditor first consider when assessing the risk of fraud in the area to be audited?

Question197: An internal auditor collected several employee testimonials Which of the following is the best action for the internal auditor to take before drawing a conclusion?

Question198: Which of the following would not include recommendations for process improvements?

Question199: Ordinarily, which of the following would not be an objective of an internal audit quality assurance review?

Question200: A film company determined that income level impacts the number of films that people watch per month, as shown by the graph below:
The graph indicates that:

Question201: The chief audit executive of a medium-sized financial institution is evaluating the staffing model of the internal audit activity (IAA). According to IIA guidance, which of the following are the most appropriate strategies to maximize the value of the current IAA resources?
* The annual audit plan should include audits that are consistent with the skills of the IAA.
* Audits of high-risk areas of the organization should be conducted by internal audit staff.
* External resources may be hired to provide subject-matter expertise but should be supervised.
* Auditors should develop their skills by being assigned to complex audits for learning opportunities.

Question202: Which of the following would be an appropriate role of the internal audit function?

Question203: Persuasive evidence indicates that a member of senior management has been involved in insider trading that would be considered fraudulent. However, the evidence was encountered during an operational audit and is not considered relevant to the audit. Which of the following is the most appropriate action for the chief audit executive to take?

Question204: 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.

Question205: Which of the following is an example of the verification of internal documentary evidence?

Question206: Which of the following is not an outcome of control self-assessment?

Question207: Which of the following represents appropriate evidence of supervisory review of engagement workpapers?
1. A supervisor's initials on each workpaper.
2. An engagement workpaper review checklist.
3. A memorandum specifying the nature, extent, and results of the supervisory review of workpapers.
4. Performance appraisals that assess the quality of workpapers prepared by auditors.

Question208: A toy manufacturer receives certain components from an overseas supplier and uses them to assemble final products Recently quality reviews have identified numerous issues regarding the components' compliance with mandatory quality standards. Which type of engagement would be most appropriate to assess the root causes of the quality issues?

Question209: According to the International Professional Practices Framework, which of the following would not be considered when performing an initial risk assessment in engagement planning?

Question210: Which method of examining entity-level controls involves gathering information from work groups that represent different levels in an organization?