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NEW QUESTION # 149
Which of the following is a disadvantage of using flowcharts during a risk assessment?
- A. Flowcharts are not applicable for evaluating the design of controls
- B. Some serious risks that are not part of the linear process can be missed
- C. People cannot quickly understand the processes via flowcharts
- D. Flowcharts do not enable auditors to identify missing controls
Answer: B
NEW QUESTION # 150
The following is an excerpt from an audit engagement workpaper:
A Company
Accounts Receivable
Date
Objective. To determine if the computer system is correctly recording all accounts receivable transactions.
Procedures: Judgmental selection of a sample of all accounts receivable balances greater than $50,000 for positive confirmation of balances.
Conclusion: Based on the results of testing wherein all but three confirmations were returned, the accounts receivable balance is fairly presented in all material respects.
Which of the following is true regarding the workpaper?
- A. A conclusion should be reached only for the results of overall testing, not for individual procedures.
- B. The format of the workpaper does not conform to the standard format for workpapers.
- C. The audit procedures used are not consistent with the audit objective.
- D. It is not appropriate to judgmentally select a sample when testing accounts receivable.
Answer: C
NEW QUESTION # 151
Which of the following would be most helpful to a governmental auditor searching for the existence of multiple welfare claims that were filed under different names but used the same address?
- A. Integrated test facility.
- B. Tagging and tracing.
- C. Spreadsheet analysis.
- D. Generalized audit software.
Answer: D
NEW QUESTION # 152
Which of the following techniques could be used to evaluate the effectiveness of changes to the operation of a computer help line?
- A. Baseline measurements.
- B. Quality circles.
- C. Walk-throughs.
- D. Benchmarking.
Answer: A
NEW QUESTION # 153
Which of the following is true regarding roles and responsibilities in risk management processes?
- A. Identifying, assessing, mitigating and monitoring activities on a continuous basis rests with the internal audit activity.
- B. Acceptance of residual risk resides with executive management level.
- C. Setting strategic direction resides with senior management.
- D. Ownership of risks resides with the board.
Answer: B
NEW QUESTION # 154
According to IIA guidance, which of the following are appropriate actions for the chief audit executive regarding management's response to audit recommendations?
- A. Evaluate and verify management's response, and determine the need and scope for additional work.
- B. Evaluate and verify management's response, and establish timelines for corrective action by management.
- C. Oversee the corrective actions undertaken by management, and establish timelines for corrective action by management.
- D. Oversee the corrective actions undertaken by management, and determine the need and scope for additional work.
Answer: A
NEW QUESTION # 155
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:
- A. Ask management to test the recovery plan immediately.
- B. Review the recovery plan and report weaknesses to management.
- C. Recommend that management and users update and test the recovery plan.
- D. Update the recovery plan for management as part of the review.
Answer: C
Explanation:
Section: Volume B
NEW QUESTION # 156
Which of the following factors would the auditor in charge be least likely to consider when assigning tasks to audit team members for an engagement?
- A. The availability of the auditors in relation to the availability of key client staff.
- B. The amount of experience the auditors have conducting audits in the specific area of the organization.
- C. Whether the budgeted hours are sufficient to complete the audit within the current scope.
- D. Whether outside resources will be needed, and their availability.
Answer: C
NEW QUESTION # 157
An internal auditor and engagement client are deadlocked over the auditor's differing opinion with management on the adequacy of access controls for a major system. Which of the following strategies would be the most helpful in resolving this dispute?
- A. Disclose the client's differing opinion in the final report.
- B. Escalate the issue to senior management for a decision.
- C. Conduct a joint brainstorming session with management.
- D. Ask the chief audit executive to mediate.
Answer: C
NEW QUESTION # 158
Which of the following is a preventive control strategy against fraud?
- A. Performing background checks on employees.
- B. Performing a surprise audit.
- C. Maintaining a whistleblower hotline.
- D. Implementing control self-assessment.
Answer: A
NEW QUESTION # 159
When conducting research, which of the following is most important?
- A. Presenting all contrary views to balance the opinion.
- B. Using computer databases or the Internet to find all relevant sources.
- C. Presenting only those facts that support the conclusion.
- D. Providing documentation of the reference sources.
Answer: D
NEW QUESTION # 160
Which of the following situations would justify the removal of a finding from the final audit report?
- A. Management disagrees with the report findings and conclusions in their responses.
- B. Management has already satisfactorily completed the recommended corrective action.
- C. Management has provided additional information that contradicts the findings.
- D. Management believes that the finding is insignificant and unfairly included in the report.
Answer: C
Explanation:
Section: Volume E
NEW QUESTION # 161
Which of the following types of internal audit consulting engagements is an example of a facilitation service?
I. Conducting control self-assessment workshops.
II. Participating on standing committees.
III. Reviewing regulatory compliance.
IV.
Benchmarking.
V.Estimating savings from outsourcing processes.
- A. I and IV only
- B. I, III, and IV only
- C. II, III, and V only
- D. I, II, III, IV, and V.
Answer: A
NEW QUESTION # 162
An employee in the sales department completes a purchase requisition and forwards it to the purchaser.
The purchaser places competitive bids and orders the requested items using approved purchase orders.
When the employee receives the ordered items, she forwards the packing slips to the accounts payable department. The invoice for the ordered items is sent directly to the sales department, and an administrative assistant in the sales department forwards the invoices to the accounts payable department for payment. Which of the following audit steps best addresses the risk of fraud in the cash receipts process?
- A. Examine whether the sales department supervisor approves invoices for payment.
- B. Observe whether the purchase orders are sequentially numbered.
- C. Verify that approvals of purchasing documents comply with the authority matrix.
- D. Determine whether the accounts payable department reconciles all purchasing documents prior to payment.
Answer: A
NEW QUESTION # 163
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?
- A. Coordinate a review of inventory management with external auditors and legal advisors and ensure each group focuses on their area of expertise to ascertain the extent of the problems, if any.
- B. Advise management that internal audit, external audit, and legal advisors all have concerns about inventory management and, given the high materiality of inventory, management should not proceed with the merger.
- C. Perform an independent audit of the merging firm's inventory management practices to verify the concerns and to provide relevant and reliable results to management for their consideration and action.
- D. Coordinate with the merging firm's internal audit department to better understand the inventory management function and whether the concerns are well-founded.
Answer: A
Explanation:
Section: Volume D
NEW QUESTION # 164
According to IIA guidance, which of the following would not be a consideration for the internal audit activity (IAA) when determining the need to follow-up on recommendations?
- A. Degree of effort and cost needed to correct the reported condition.
- B. Impact that may result should the corrective action fail.
- C. Complexity of the corrective action.
- D. Amount of resources required to conduct the follow-up activities.
Answer: D
NEW QUESTION # 165
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?
- A. Minimize instances of ad hoc communications with board members.
- B. Avoid making presumptuous comments without sufficient facts.
- C. Consider the possible repercussions created by commentary on deficiencies.
- D. Consider formality and tone of communications to ensure they are appropriate.
Answer: A
Explanation:
Section: Volume D
NEW QUESTION # 166
The chief audit executive can illustrate the value of the internal audit activity by reporting which of the following to the board?
- A. The overall performance resulting from the internal audit balanced scorecard
- B. The number of outstanding and overdue management actions
- C. The experience of the organization's internal auditors
- D. The number of audits in the annual audit plan relative to similar organizations
Answer: A
NEW QUESTION # 167
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