Page 1 out of 34. Viewing questions 1-15 out of 501
Question 1
Which of the following analytical procedures should an internal auditor use to determine whether monthly expenses for the accounting department are reasonable?
A.
Review year-over-year trending of total dollars spent in each period.
B.
Review changes to the vendor master file for suspicious activity.
C.
Review the percentage of on-time payments against prior periods.
D.
Review total expenses for accounting against other department expenses in the organization.
Answer:
A
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Question 2
During an internal audit engagement, which of the following is true regarding the decision to use statistical sampling or nonstatistical sampling?
A.
The decision affects the test procedures performed.
B.
The auditor's response to errors detected will be influenced.
C.
The competence of the evidence obtained is greater with statistical sampling.
D.
Nonstatistical sampling may be more cost effective.
Answer:
A
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Question 3
When auditing an organization's purchasing function, which of the following appropriately matches an engagement objective and the resulting audit procedure?
A.
Determine whether the purchasing department complies with policy by examining a random selection of purchase orders.
B.
Evaluate whether purchasing requests are properly approved by authorized staff by obtaining independent verification from the vendors.
C.
Ascertain whether material receipts are recorded on a timely basis by reviewing physical inventory stock counts.
D.
Determine whether prices charged for goods received are correct by reviewing the appropriate accounts payable record by vendor.
Answer:
A
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Question 4
A team of internal auditors is assigned to audit the employee relations process in an organization, which includes employee conduct and disciplinary hearings. Which of the following audit approaches would provide the auditors with the best evidence to determine the degree to which disciplinary decisions are complying with documented policy?
A.
Review a random sample of concluded disciplinary reports to assess how the policy was applied in each case.
B.
Interview a sample of impacted employees for their opinions on the clarity and fairness of the policy.
C.
Observe several disciplinary hearings to determine whether they are in compliance with the policy.
D.
Conduct an interview to assess the disciplinary hearing chairman’s understanding of the policy and its appropriate use.
Answer:
A
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Question 5
Which of the following represents the best method for confirming that vendor invoices were for authorized purchases?
A.
Vouching vendor invoices to payments made.
B.
Sorting invoices by purchase orders and comparing for successive duplicate invoices.
C.
Comparing a random sample of vendor invoices to purchase orders.
D.
Sorting payments by invoice to detect successive duplicate invoices.
Answer:
C
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Question 6
An internal auditor is using attributes sampling to test internal controls. Under which of the following circumstances would the auditor increase the original sample size to estimate error occurrence at a given precision and confidence level?
A.
The sample rate of occurrence plus the precision exceeds the acceptable error rate.
B.
The sample rate of occurrence is less than the acceptable error rate.
C.
The acceptable rate of occurrence less the precision exceeds the sample rate of occurrence.
D.
The sample rate of occurrence plus the precision equals the acceptable error rate.
Answer:
A
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Question 7
Which of the following is the most appropriate objective for establishing a professional development plan for the internal audit activity?
A.
A plan that focuses on furthering the independence of the internal audit activity.
B.
A plan that ensures internal auditors collectively possess expertise in various fields to avoid outsourcing.
C.
A plan based on individual preferences and proposals, which helps internal auditors achieve greater success.
D.
A plan that focuses on filling gaps in the current skills needed to complete audit objectives.
Answer:
D
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Question 8
Which of the following is an example of internal benchmarking?
A.
Book value per common share ratio is lower than that of the prior year.
B.
Staff turnover ratio is higher than the comparable organization in the same industry.
C.
Utilities expense of the sales unit is higher than that of the customer service unit.
D.
Sales are significantly higher than the industry’s average for five years.
Answer:
C
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Question 9
While conducting an information security audit, an internal auditor learns that the existing disaster recovery plan is four years old and untested. The auditor also learns that in the four years since the recovery plan was implemented, the information systems have undergone extensive changes. Which of the following actions is most appropriate for the auditor to take?
A.
Inform management and request that the plan be tested immediately.
B.
Update the recovery plan for management, as part of the review.
C.
Evaluate the recovery plan and report weaknesses to management.
D.
Recommend that management and users update and test the recovery plan.
Answer:
D
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Question 10
Which of the following is the primary reason an internal auditor would issue an interim report during an engagement?
A.
To provide a status update on a short engagement to management of the area under review and to the audit supervisor.
B.
To confirm agreement with preliminary observations and conclusions identified during the engagement.
C.
To provide those responsible for the area under review with the opportunity to act on certain observations immediately.
D.
To verify that the corrective actions required by senior management are completed as agreed.
Answer:
C
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Question 11
Senior IT management requests the internal audit activity to perform an audit of a complex IT are a. The chief audit executive (CAE) knows that the internal audit activity lacks the expertise to perform the engagement. Which of the following is the most appropriate action for the CAE to take?
A.
Decline the audit engagement, because the Standards prohibit internal auditors from performing engagements where they lack the necessary competencies.
B.
Accept the audit engagement and use the engagement as an opportunity to develop the audit team’s IT expertise while performing the audit work.
C.
Temporarily hire an experienced and knowledgeable IT analyst from the organization's IT department to lead the audit.
D.
Outsource the audit engagement to a reputable IT audit consulting firm.
Answer:
D
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Question 12
Which of the following factors should be considered when determining the staff requirements for an audit engagement? The internal audit activity's time constraints. The nature and complexity of the area to be audited. The period of time since the area was last audited. The auditors’ preference to audit the area. The results of a preliminary risk assessment of the activity under review.
A.
1 and 4 only.
B.
1, 2, and 5 only.
C.
2, 3, and 5 only.
D.
1, 2, 3, 4, and 5.
Answer:
B
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Question 13
Which of the following statements is true regarding internal control questionnaires (ICQs)?
A.
ICQs are most useful in more organic, decentralized organizations with specialized departmental or regional characteristics.
B.
An ICQ can be used effectively either by sending it in advance for management of the area under review to complete or by testing each procedure and recording the results.
C.
An ICQ is not an efficient tool, as it can only inquire about controls and it does not test them.
D.
ICQs are also known as checklist audits and encourage management of the area under review to answer "no" or "yes" more accurately.
Answer:
B
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Question 14
According to IIA guidance, which of the following is most likely to become part of the engagement work program?
A.
Information obtained from historic audits and memos.
B.
Risk and control registers or matrices.
C.
Resource deployment plans and sampling methodologies.
D.
Prior findings and management responses.
Answer:
C
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Question 15
An internal auditor is performing a review of an organization's vendor for any possible conflicts of interest. Which of the following would provide the greatest assistance to the auditor in meeting this objective?