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NEW QUESTION 226
In which of the following functions would fraud be most likely to occur?
- A. Collecting payments on accounts.
- B. Maintaining custody of inventory records.
- C. Approving changes to employee records.
- D. Preparing customer statements.
Answer: A
NEW QUESTION 227
Which of the following professional development approaches would offer internal auditors the most opportunities to broaden their engagement experiences?
- A. Rotate internal auditors among different engagement assignments.
- B. Assign more experienced internal auditors to mentor the less experienced auditors.
- C. Send internal auditors to external trainings in advanced internal audit topics.
- D. Appraise internal auditors' performance and competencies at least annually and issue constructive feedback.
Answer: A
NEW QUESTION 228
According to The IIA's Code of Ethics, which of the following actions violates the principle of confidentiality?
- A. Agreeing to reword an observation to avoid the client complaining directly to the auditor's supervisor.
- B. Providing a friend with the marketing strategic plan, which she will use to prepare her university thesis.
- C. Providing personal tax preparation services for a fee for several employees during the lunch hour.
- D. Accepting a consulting request in the IT department without possessing the requisite experience.
Answer: B
NEW QUESTION 229
An organization has a health and safety division that conducts audits to meet regulatory requirements. The chief health and safety officer reports directly to the CEO. Which of the following describes an appropriate role for the chief audit executive (CAE) with regard to the organization's health and safety program?
- A. The CAE should coordinate with, and review the work of, the chief health and safety officer to gain an understanding of whether risks related to health and safety are managed properly.
- B. The CAE has no role to play, because the chief health and safety officer reports to a senior executive.
- C. The CAE should give periodic reports directly to the regulator regarding health and safety issues, as it is the appropriate regulatory oversight body.
- D. The CAE should hire an independent external specialist to conduct an annual assessment and provide assurance over the effectiveness of the health and safety program and the reliability of its reports.
Answer: A
NEW QUESTION 230
The internal audit activity is planning a procurement audit and needs to obtain a thorough understanding of the subcontracting process, which can involve multiple individuals in multiple countries.
Which of the following internal audit tools would be most effective to document the process and the key controls?
- A. Segregation of duties matrix.
- B. Procurement employee survey.
- C. Internal control checklist.
- D. Cross-functional flow chart.
Answer: D
NEW QUESTION 231
The economic order quantity can be calculated using the following formula:
Which of the following describes how the optimal order size will change if the annual demand increases by 36 percent?
- A. Decrease by about 17 percent.
- B. Decrease by about 7 percent.
- C. Increase by about 17 percent.
- D. Increase by about 7 percent.
Answer: C
NEW QUESTION 232
Which of the following network types should an organization choose if it wants to allow access only to its own personnel?
- A. A local area network.
- B. An extranet
- C. The internet
- D. An intranet
Answer: A
NEW QUESTION 233
Which of the following scenarios best illustrates a rationalization as the root cause of potential fraud?
- A. Security cameras that monitor cash handling at the register are not functioning.
- B. The organization is slowly phasing out three mature products that produce the highest commissions for the sales staff.
- C. The controller at a nationwide manufacturing company recently opted to no longer require two-week mandatory vacations for accounting staff.
- D. Managers who have been with the organization for several decades become aware that newly hired, younger managers are being moved more quickly into senior positions.
Answer: C
NEW QUESTION 234
Which of the following is the primary engagement responsibility of an entry-level internal auditor?
- A. Analysis.
- B. Reporting.
- C. Leadership.
- D. Documentation.
Answer: A
NEW QUESTION 235
Which of the following would be the most important consideration by the internal audit activity when selecting employees to perform an internal quality assessment?
- A. Their understanding of auditing standards.
- B. Previous experience working with the internal audit activity.
- C. The nature of their regular duties and responsibilities.
- D. Their reporting line within the organization.
Answer: A
NEW QUESTION 236
What is the purpose of a secondary control?
- A. It partially reduces the residual risk level when a key control does not operate effectively.
- B. lt combines with other controls to help reduce significant risk exposures to an acceptable level.
- C. It helps to ensure the completeness and accuracy of automated controls in a system environment.
- D. It replaces primary controls that are either ineffective or cannot fully mitigate a risk.
Answer: B
NEW QUESTION 237
The chief audit executive (CAE) is planning to conduct an internal assessment of the internal audit activity (IAA). Part of this assessment will include benchmarking. According to IIA guidance, which of the following qualitative metrics would be appropriate for the CAE to use?
1. Average client customer satisfaction score for a given year.
2. Client survey comments on how to improve the IAA.
3. Auditor interviews once an audit has been completed.
4. Percentage of audits completed within 90 days.
- A. 1 and 2.
- B. 1 and 3.
- C. 3 and 4.
- D. 2 and 3.
Answer: D
NEW QUESTION 238
Which of the following is the most important concept to be included in a consulting engagement agreement?
- A. Define the duties and responsibilities needed from management to perform the engagement.
- B. Disclose the fact that follow-up reviews may be conducted to ensure that recommendations are implemented adequately.
- C. Clarify that matters discovered during the engagement may also be reported to senior management and the audit committee.
- D. Disclose the fact that auditors who perform the work may not be subject matter experts in the topic of the review.
Answer: C
NEW QUESTION 239
An organization uses a database management system (DBMS) as a repository for data. The DBMS, in turn, supports a number of end-user developed applications which were created using fourth-generation programming languages. Some of the applications update the database. Which of the following is the most important control related to the integrity of the data in the database?
- A. A hierarchical database model is adopted so that multiple users can be served at the same time.
- B. End users have their read-only applications approved by the information systems department before accessing the database.
- C. Concurrency update controls are in place.
- D. End-user applications are developed on personal computers before being implemented on the mainframe.
Answer: C
NEW QUESTION 240
According to IIA guidance, which of the following steps are most important for an internal auditor to perform when evaluating an organization's social and environmental impact on the local community?
* Determine whether previous incidents have been reported, managed, and resolved.
* Determine whether a business contingency plan exists.
* Determine the extent of transparency in reporting.
* Determine whether a cost/benefit analysis was performed for all related projects.
- A. 2 and 4.
- B. 1 and 4.
- C. 2 and 3.
- D. 1 and 3.
Answer: D
NEW QUESTION 241
Which of the following actions is most likely to gain support for process change?
- A. Demonstrate support from senior management.
- B. Engage the various communities of practice within the organization.
- C. Set clear objectives.
- D. Establish key competencies.
Answer: B
NEW QUESTION 242
According to IIA guidance, which of the following is least compliant with the requirements regarding an internal auditor's need for objectivity?
- A. An internal auditor performed an assurance engagement for the effectiveness of accounts payable access controls, one of which he previously helped to design.
- B. An internal auditor assessed the effectiveness of controls over payroll software, which he had helped implement with a previous employer.
- C. An internal auditor participated in an audit of controls around absenteeism, despite providing some consultation on controls in this area earlier in the year.
- D. An internal auditor, previously employed in the quality assurance operations area, performed a consulting engagement for the operations manager.
Answer: A
NEW QUESTION 243
Which of the following options correctly defines a transmission control protocol/Internet protocol (TCP/IP)?
- A. System software that acts as an interface between a user and a computer.
- B. System software that translates hypertext markup language to allow users to view a remote webpage.
- C. A standardized set of guidelines that facilitates communication between computers on different networks.
- D. A network of servers used to control a variety of mission-critical operations.
Answer: C
NEW QUESTION 244
Which of the following is true regarding the COSO enterprise risk management framework?
- A. The framework facilitates effective risk management, even if objectives have not been established.
- B. The framework integrates with, but is not dependent upon, the corresponding internal control framework.
- C. The framework categorizes an organization's objectives to distinct, non overlapping objectives.
- D. Control environment is one of the framework's eight components.
Answer: B
NEW QUESTION 245
According to IIA guidance, which of the following statements is true regarding the reporting of results from an external quality assessment of the internal audit activity?
- A. The results of self-assessments with independent external validation are shared with the board upon completion, and monitoring of recommended improvements must be reported monthly.
- B. The external assessment results are reported upon completion in confidence directly to the board, and senior management is advised only of the recommendations and improvement action plans.
- C. The external assessment results are communicated upon completion to senior management and the board, but action plans for recommended improvements do not have to be reported.
- D. The requirements for reporting quality assessment results are the same for external assessments and self-assessments with independent external validation.
Answer: A
NEW QUESTION 246
Which of the following statements is true regarding the use of public key encryption to secure data while it is being transmitted across a network?
- A. Both the key used to encrypt the data and the key used to decrypt the data are made public.
- B. The key used to encrypt the data is made public but the key used to decrypt the data is kept private.
- C. The key used to encrypt the data is kept private but the key used to decrypt the data is made public.
- D. Both the key used to encrypt the data and the key used to decrypt the data are made private.
Answer: B
NEW QUESTION 247
While auditing an organization's credit approval process, an internal auditor learns that the organization has made a large loan to another auditor's relative. Which course of action should the auditor take?
- A. Disclose in the engagement final communication that the relative is a customer.
- B. Immediately withdraw from the audit engagement.
- C. Proceed with the audit engagement, but do not include the relative's information.
- D. Have the chief audit executive and management determine whether the auditor should continue with the audit engagement.
Answer: D
NEW QUESTION 248
One change control function that is required in client/server environments, but is not required in mainframe environments, is to ensure that:
- A. Movement from the test library to the production library is controlled.
- B. Emergency move procedures are documented and followed.
- C. Appropriate users are involved in program change testing.
- D. Program versions are synchronized across the network.
Answer: D
NEW QUESTION 249
During an assurance engagement, an internal auditor noted that the time staff spent accessing customer information in large Excel spreadsheets could be reduced significantly through the use of macros. The auditor would like to train staff on how to use the macros. Which of the following is the most appropriate course of action for the internal auditor to take?
- A. The auditor must not perform the training, because any task to improve the business process could impact audit independence.
- B. The auditor should get permission to extend the current engagement, and with the process owner's approval, perform the improvement task.
- C. The auditor may proceed with the improvement task without obtaining formal approval, because the task is voluntary and not time-intensive.
- D. The auditor must create a new, separate consulting engagement with the business process owner prior to performing the improvement task.
Answer: B
NEW QUESTION 250
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