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NEW QUESTION 104
Which of the following would not be a red flag for fraud?
- A. New employees occasionally fail to meet established project deadlines due to staffing shortages.
- B. A weak control environment has been accepted by management to encourage creativity.
- C. Several recent, large expenditures to a new vendor have not been documented.
- D. A manager has bragged about multiple extravagant vacations taken within the last year, which are excessive relative to the manager's salary.
Answer: A
Explanation:
Section: Volume E
NEW QUESTION 105
An internal auditor for a large computer company suspects that returned computer systems are being repackaged as new products and shipped to other customers before the defects have been repaired. Which of the following would be the most persuasive piece of evidence in support of the auditor's suspicions?
- A. Evidence of returned goods in the shipping and receiving area.
- B. An unusual number of customer complaints.
- C. The results of a complete physical inventory taken at year end.
- D. Credit memos issued after year end for goods shipped before year end.
Answer: B
Explanation:
Section: Volume D
NEW QUESTION 106
An internal auditor is testing the controls of a large and complex food production process where quality assurance is critical. Management provides process charts and documentation, but the auditor quickly determines that this information is incomplete and out of date. Which of the following would be the most appropriate course of action for the auditor to follow?
- A. Use the documentation but meet with the production supervisor to obtain updated information before proceeding.
- B. Defer the audit until management can provide updated charts and documentation as this is their responsibility.
- C. Amend the engagement objectives recognizing that important information is not available to protect the engagement's integrity.
- D. Use the documentation but use observation during the engagement to provide missing information.
Answer: A
NEW QUESTION 107
The primary role of the internal audit activity in regard to an organization's ethical climate is to:
- A. Demonstrate ethical behavior.
- B. Periodically assess the ethical climate.
- C. Utilize surveys to evaluate employee ethics.
- D. Participate as chief ethics officer.
Answer: B
NEW QUESTION 108
Two individuals are being considered for an audit team that is to perform a highly technical review.
Which of the following situations would preclude selection of the individual for the audit due to an objectivity concern?
I. Person A is a member of the internal audit staff and has the required technical skills. Person A participated in a controls review of the system to be audited when it was being developed.
II. Person B is a technical specialist who understands the audit area but is not a member of the internal audit staff. Although person B has personal credibility in the information systems department to be audited, person B works for another department in the organization.
- A. II only
- B. I only
- C. Both I and II.
- D. Neither I nor II.
Answer: D
Explanation:
Section: Volume A
NEW QUESTION 109
During an account receivables audit, an internal auditor found a significant number of input errors resulting in a $500, 000 balance understatement.
Which of the following is the most important question the internal auditor should ask to develop an appropriate recommendation for this finding?
- A. Who?
- B. Why?
- C. How?
- D. When?
Answer: B
NEW QUESTION 110
In developing an appropriate work program for an audit engagement, the most important factor for an audit supervisor to consider is the:
- A. Potential impact of risks.
- B. Capabilities of audit personnel.
- C. Availability of records and data.
- D. Time required to complete the engagement.
Answer: A
NEW QUESTION 111
Which of the following is the most common way that occupational fraud is detected?
- A. External audits.
- B. Whistleblower hotline.
- C. Internal audits.
- D. Key controls.
Answer: B
NEW QUESTION 112
Which of the following would not be a red flag for fraud?
- A. New employees occasionally fail to meet established project deadlines due to staffing shortages.
- B. A weak control environment has been accepted by management to encourage creativity.
- C. Several recent, large expenditures to a new vendor have not been documented.
- D. A manager has bragged about multiple extravagant vacations taken within the last year, which are excessive relative to the manager's salary.
Answer: A
NEW QUESTION 113
When planning an audit engagement, what should an internal auditor first consider when assessing the risk of fraud in the area to be audited?
- A. Management's risk appetite.
- B. Organizational structure.
- C. Impact of and exposure to fraud.
- D. Existence of evidence of fraud.
Answer: C
NEW QUESTION 114
Which of the following would provide the best evidence of compliance with an airline's standard of having aircraft refueled and cleaned within a specified time of arrival at an airport?
- A. Observation of selected aircraft while they are being refueled and cleaned.
- B. Time cards completed by aircraft cleaning and fueling crews.
- C. Vendor fuel invoices that have been reconciled to inventory records.
- D. Comparison of the standard hourly labor costs for cleaning and fueling personnel with actual labor charges.
Answer: A
NEW QUESTION 115
Which of the following statements is true about The IIA Global Internal Audit Competency Framework?
- A. The core competencies outlined in the framework are not expected of a person undertaking an entry-level position as an internal auditor.
- B. The framework is designed to be used primarily by chief audit executives that are developing indicators to measure the performance of the internal audit activity for which they are responsible.
- C. The framework lists the core competencies internal auditors should possess before attempting to attain The IIA's Certified Internal Auditor certification.
- D. The framework describes competencies needed for individual internal auditors, but not those necessary at the chief audit executive level.
Answer: B
NEW QUESTION 116
Which of the following should be the first step that an internal auditor takes to establish data integrity when building an audit working copy of a large database?
- A. Ensure that the data is efficiently organized within the database.
- B. Review the data for statistical patterns.
- C. Verify that all required data was downloaded.
- D. Search for anomalies in the extracted information.
Answer: C
NEW QUESTION 117
According to the COSO framework, which of the following is not a principle of internal control?
- A. Human resource policies and practices.
- B. Management's philosophy and operating style.
- C. Integrity and ethical values.
- D. Risk assessment.
Answer: D
NEW QUESTION 118
Which of the following corporate travel policies is least likely to be cost-effective?
- A. Negotiating corporate agreements with hotels, airlines, and car rental firms.
- B. Selecting the least expensive airline travel available, without regard to total travel time and distance.
- C. Tracking credits for canceled airline reservations.
- D. Traveling to facilities in tourist areas during the off-season when possible.
Answer: B
Explanation:
Section: Volume A
NEW QUESTION 119
According to the Standards, which of the following best describes why initial audit test results should be reported to the auditor-in-charge prior to advising management?
- A. It is required to demonstrate that effective engagement supervision has occurred.
- B. It helps ensure that appropriate professional judgments and conclusions are made.
- C. It increases the likelihood of obtaining the audit client's agreement with the results.
- D. It ensures that an appropriate chain of evidence is maintained through the workpapers.
Answer: B
Explanation:
Section: Volume E
NEW QUESTION 120
An internal audit team is performing an audit of workplace accident claims.
Which of the following actions by the audit team best demonstrates due professional care?
- A. Having an occupational health officer on the engagement team.
- B. Determining that the claims have been classified properly.
- C. Placing reliance on medical reports from the injured worker's doctor.
- D. Reviewing claims to ensure all accidents actually occurred in the workplace.
Answer: A
NEW QUESTION 121
The primary objective of risk-based auditing is to assess the:
- A. Adequacy of controls.
- B. Efficiency of controls.
- C. Economy of controls.
- D. Compliance with controls.
Answer: A
NEW QUESTION 122
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