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NEW QUESTION # 147
Evidence discovered during the course of an engagement suggests that multiple incidents of fraud have occurred. There do not appear to be sufficient controls in place to prevent reoccurrence. Which of the following is the internal auditor's most appropriate next step?
- A. Immediately notify management of the area under review and the other internal auditors involved in the engagement.
- B. Fully document in the workpapers the evidence that has been discovered and recommend appropriate controls to address the fraud.
- C. Discuss the situation with the engagement supervisor to determine whether fraud investigation experts are required to investigate the matter properly.
- D. Provide the evidence that was discovered to local law enforcement for possible prosecution of the suspected fraud.
Answer: A
NEW QUESTION # 148
According to IIA guidance, which of the following roles would be appropriate for an internal auditor regarding fraud risk?
1. Identification.
2. Mitigation.
3. Remediation.
4. Reduction.
- A. 1 only. |
- B. 1 and 4 only.
- C. 1,2, 3, and 4.
- D. 1, 3, and 4 only.
Answer: B
NEW QUESTION # 149
According to the HA Code of Ethics, which of the following statements best describes the principle of competency?
- A. Internal auditors shall perform their work in accordance with the Standards.
- B. Internal auditors shall be prudent in the use of information acquired while performing their work.
- C. Internal auditors shall perform their work with honesty, diligence, and responsibility.
- D. Internal auditors shall perform their work in accordance with the law and make disclosures expected by the law.
Answer: A
NEW QUESTION # 150
A headquarters-based internal auditor has been sent to a major overseas subsidiary to conduct various engagements. Initially, the internal auditor spends time to become familiar with local customs and organization's practices while embarking on the first engagement. Which of the following competencies does the internal auditor exercise?
- A. Governance, risk, and control.
- B. Persuasion and collaboration.
- C. Business acumen.
- D. Communication.
Answer: D
NEW QUESTION # 151
Which of the following does not need to be defined in the internal audit charter?
- A. The audit engagements to be performed during the upcoming year.
- B. The internal audit activity's position within the organization.
- C. The scope of internal audit activities.
- D. Management and the board of directors' agreement regarding the roles and responsibilities of the internal audit activity.
Answer: A
NEW QUESTION # 152
Which of the following actions should an internal auditor take to exercise due professional care?
1. Consider the probability of significant noncompliance in each audit engagement.
2. Weigh the cost of assurance against the benefits.
3. Perform assurance procedures with sufficient care to ensure that all risks are identified.
- A. 1 and 2 only
- B. 2 and 3 only
- C. 1, 2, and 3
- D. 1 and 3 only
Answer: A
NEW QUESTION # 153
An organization is beginning to implement an enterprise risk management program. One of the first steps is to develop a common risk language. Which of the following statements about a common risk language is true?
- A. Stakeholders will have more assurance that the risks are assessed consistently.
- B. Management will be able to reduce inherent risk because they will have a better understanding of risk.
- C. Internal auditors will be able to reduce their sample sizes because controls will be more consistent.
- D. Decision makers will understand that the likelihood of missing or ineffective controls will be reduced.
Answer: A
NEW QUESTION # 154
Which of the following techniques would provide the most compelling evidence that a safety hazard exists within a manufacturing facility?
- A. Analysis of facility operating reports, focusing on instances when breakdowns occurred.
- B. Review of records involving safety violations, filed by facility production employees.
- C. Observation of the facility during operations.
- D. Questioning of facility management, including the facility safety officer.
Answer: C
NEW QUESTION # 155
Which of the following is an example of a directive control?
- A. Segregation of duties.
- B. Exception reports.
- C. Automated reconciliations.
- D. Incentive compensation plans.
Answer: D
NEW QUESTION # 156
Suspecting fraud, the chief financial officer (CFO) asked the internal audit activity to investigate a significant increase in travel related expenditures. Work was performed by a qualified internal auditor. Following the completion of the engagement, the chief audit executive (CAE) reported to the CFO that no violations were found and no fraud had occurred.
According to the Standards, which of the following principles did the CAE violate?
- A. Organizational independence.
- B. Proficiency.
- C. Due professional care.
- D. Individual objectivity.
Answer: C
NEW QUESTION # 157
An accounts receivable clerk receives cash payments, posts the payments to customer accounts, and prepares the daily cash deposit.
The clerk has been stealing some cash and manipulating the customer payments to hide the theft.
This fraud could be detected with which of the following controls?
- A. Total cash deposits for the month are reconciled to the cash receipts journal.
- B. Monthly bank reconciliations are performed by the clerk on a timely basis.
- C. Total cash deposits are compared with the bank reconciliation.
- D. Names, amounts, and dates on remittance advices are reconciled with the names, amounts, and dates recorded in the cash receipts journal.
Answer: D
NEW QUESTION # 158
An organization decides to take no action on one of its financial risks because the cost of implementing the control outweighs the value of the asset being protected. Which of the following best describes this risk strategy?
- A. Risk avoidance.
- B. Risk sharing.
- C. Risk acceptance.
- D. Risk-benefit analysis.
Answer: C
NEW QUESTION # 159
An internal auditor uses a predefined macro provided in a popular spreadsheet application to verify the present value of the organization's investments. Which of the following is the most appropriate course of action regarding the auditor's use of this functionality?
- A. The auditor should tabulate the results in the spreadsheet to ensure the macro has generated the correct results for all calculations.
- B. The auditor should review the programming of the macro before its use to ensure that it is appropriate for the required calculations.
- C. The auditor should accept the calculations generated by the function, as any further work or documentation would be inefficient.
- D. The auditor should perform a manual recalculation of several results to validate and document the results.
Answer: D
NEW QUESTION # 160
According to IIA guidance, which of the following should be formally documented in the internal audit charter?
- A. The nature of consulting services provided by the internal audit activity.
- B. The internal audit activity's responsibility for the organization's governance framework.
- C. The budgeting process for the internal audit activity.
- D. The internal audit activity's responsibility for imposing risk management processes.
Answer: A
NEW QUESTION # 161
A furniture manufacturer has installed a new fire sprinkler system at its central warehouse and canceled the existing fire insurance policy on that property. What change of risk response strategy does this course of action most likely reflect?
- A. From sharing to reduction.
- B. From acceptance to avoidance.
- C. From acceptance to reduction.
- D. From sharing to avoidance.
Answer: A
NEW QUESTION # 162
According to the COSO internal control framework, which of the following best describes the use of continuous auditing programs by the internal audit activity?
- A. Control activities.
- B. Monitoring.
- C. Risk assessment.
- D. Control environment.
Answer: B
NEW QUESTION # 163
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