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NEW QUESTION NO: 8
Which of the following risk assessment tools would best facilitate the matching of controls to risks?
A. Control matrix.
B. Internal control questionnaire.
C. Program evaluation and review technique (PERT) analysis.
D. Control flowchart.
Answer: A

NEW QUESTION NO: 9
Which of the following is a benefit from reduced testing during a particular phase of an audit engagement?
A. There is less concern about assessing inherent risk.
B. The size of the internal audit activity can be reduced.
C. Additional audit hours are available for pursuing other engagement objectives.
D. The level of planned audit risk is lowered.
Answer: C

NEW QUESTION NO: 10
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provides process charts and documentation, but the auditor quickly determines that this information is incomplete and out of date.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. Amend the engagement objectives recognizing that important information is not available to protect the engagement's integrity.
B. Use the documentation but use observation during the engagement to provide missing information.
C. Defer the audit until management can provide updated charts and documentation as this is their responsibility.
D. Use the documentation but meet with the production supervisor to obtain updated information before proceeding.
Answer: D

NEW QUESTION NO: 11
When auditing the award of a major contract, which of the following should an internal auditor suspect as a red flag for a bidding fraud scheme?
1. Subsequent change orders increase requirements for low-bid items.
2. Material contract requirements are different on the actual contract than on the request for bids.
3. A high percentage of employees are charged to indirect accounts.
4. Losing bidders are hired as subcontractors.
A. 1 and 3.
B. 2 and 4.
C. 2 only
D. 1 only
Answer: B

NEW QUESTION NO: 12
An organization has implemented a software system that requires a supervisor to approve transactions that would cause treasury dealers to exceed their authorized limit. This is an example of which of the following types of controls?
A. Detective controls.
B. Preventive controls.
C. Soft controls.
D. Directive controls.
Answer: B

NEW QUESTION NO: 13
Which of the following internal control weaknesses would an internal auditor most likely detect while reviewing a flowchart that depicts the purchasing function of an organization?
A. Purchasing policies have not been updated.
B. Payments to suppliers are made before goods are received.
C. Payments for goods received have not been authorized at the appropriate level.
D. The organization is not taking advantage of quantity discounts available from its suppliers.
Answer: B

NEW QUESTION NO: 14
The chief audit executive for an organization has just completed a risk assessment process, identified the areas with the highest risk, and assigned an audit priority to each. Which of the following statements is true and consistent with the International Professional Practices Framework?
I. Items should be ranked in the order of quantifiable dollar exposure to the organization.
II. The audit priorities should be in order of major control deficiencies.
III. The risk assessment, though quantified, is the result of professional judgments about both exposures and probability of occurrences.
A. II and III only
B. III only
C. I, II, and III.
D. I only
Answer: B

NEW QUESTION NO: 15
A major difference between enterprise risk management and traditional risk management lies in the narrow focus of traditional risk management on:
I. Property and liability risks.
II. Risks with insurance solutions.
III. Risks impacting organizational objectives.
A. II and III only
B. I, II, and III.
C. I and II only
D. I and III only
Answer: C

NEW QUESTION NO: 16
According to the International Professional Practices Framework, a primary purpose of evaluating the adequacy of an organization's risk management, control, and governance processes is to determine if it:
A. Assures the reliability and integrity of information used by management.
B. Provides reasonable assurance that the organization's objectives will be met.
C. Was designed to ensure compliance with policies, plans, procedures, laws, and regulations.
D. Mitigates inherent risk.
Answer: B

NEW QUESTION NO: 17
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, previously employed in the quality assurance operations area, performed a consulting engagement for the operations manager.
B. An internal auditor participated in an audit of controls around absenteeism, despite providing some consultation on controls in this area earlier in the year.
C. An internal auditor assessed the effectiveness of controls over payroll software, which he had helped implement with a previous employer.
D. An internal auditor performed an assurance engagement for the effectiveness of accounts payable access controls, one of which he previously helped to design.
Answer: D

NEW QUESTION NO: 18
Which of the following factors related to an organization's performance management system would not contribute to the organization's success?
A. Performance management is integrated into other organizational processes and human resource processes.
B. Subordinates and superiors have shared responsibility for the performance management process.
C. Staff members own the performance management process, thereby ensuring implementation and accountability.
D. Performance management is linked to competence and knowledge management.
Answer: C