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NEW QUESTION # 22
In the area of business acumen, which of the following competencies would be the sole responsibility of an internal audit staff member?
- A. Maintaining industry-specific knowledge appropriate to the organization.
- B. Assessing how IT contributes to organization objectives, risks, and relevance to audit.
- C. Maintaining technical aspects of accounting standards and reporting processes.
- D. Understanding regulatory and legal framework and assessing its relevance.
Answer: D
NEW QUESTION # 23
A chief audit executive (CAE) is selecting an internal audit team to perform an audit engagement that requires a high level of knowledge in the areas of finance, investment portfolio management, and taxation. If neither the CAE nor the existing internal audit staff possess the required knowledge, which of the following actions should the CAE take?
- A. Postpone the audit until the CAE hires internal audit staff with the required knowledge.
- B. Select the most experienced auditors in the department to perform the engagement.
- C. Hire consultants who possess the required knowledge to perform the engagement.
- D. Ask the audit committee to decide the course of action.
Answer: C
NEW QUESTION # 24
Which of the following types of fraud includes embezzlement?
- A. Fraudulent statements.
- B. Corruption.
- C. Misappropriation of assets.
- D. Bribery.
Answer: C
NEW QUESTION # 25
An IT contractor applied for an internal audit position at a bank. The contractor worked for the bank's IT security manager two years ago. If the audit manager interviewed the contractor and wants to extend a job offer, which of the following actions should the chief audit executive pursue?
- A. Allow the audit manager to hire the contractor, but state that the individual is not allowed to work on IT security audits for one year.
- B. Allow the audit manager to hire the contractor and state that the individual is free to perform IT audits, including security.
- C. Not allow the audit manager to hire the contractor, as it would be a conflict of interest.
- D. Not allow the audit manager to hire the contractor and ask the individual to apply again in one year.
Answer: B
NEW QUESTION # 26
Which of the following best explains why integrity is a necessary personal quality for internal auditors at all levels?
- A. Internal auditor integrity enables the internal auditor to avoid being challenged by any party in the organization.
- B. Internal auditor integrity enables the internal audit activity to be able to demonstrate independence.
- C. Internal auditor integrity enables stakeholders to constantly question the work of the internal audit activity.
- D. Internal auditor integrity enables users of internal auditors' work to make important business decisions.
Answer: D
NEW QUESTION # 27
Which of the following would most likely be considered a red flag for fraud?
- A. An employee with significant personal debt is in charge of handling large wire transfers for the organization.
- B. An organization lacks a whistleblower hotline for reporting suspicious activity.
- C. An employee in charge of payroll disbursements has rotated these duties with several colleagues.
- D. A senior manager has been delegating the authority to sign-off on small dollar amount purchases to a subordinate.
Answer: A
NEW QUESTION # 28
A new director was hired to lead the internal audit activity at a small start-up company. Which of the following assignments would impair the director's independence?
- A. Performing a pre-implementation review of the company's payroll application.
- B. Preparing the financial statements for the company's defined contribution plan.
- C. Providing the COBIT framework as a possible IT management tool.
- D. Reviewing the company's policy for foreign currency translation adjustments for compliance with accounting standards.
Answer: B
NEW QUESTION # 29
An internal auditor notes that employees are able to download files from the internet. According to IIA guidance, which of the following strategies would best protect the organization from the risk of copyright infringement and licensing violations resulting from this practice?
- A. Utilize dedicated and encrypted network connections.
- B. Install a software inventory management application.
- C. Apply antivirus and patch management software.
- D. Utilize secure socket layer encryption.
Answer: B
NEW QUESTION # 30
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 law and make disclosures expected by the law.
- B. Internal auditors shall perform their work with honesty, diligence, and responsibility.
- C. Internal auditors shall be prudent in the use of information acquired while performing their work.
- D. Internal auditors shall perform their work in accordance with the Standards.
Answer: D
NEW QUESTION # 31
Which of the following is an activity that an internal auditor must not perform?
- A. Establish and provide continuing assurance on an anti-money laundering program for new hires.
- B. Survey employees for their understanding of anti-money laundering practices.
- C. Provide assurance for the effectiveness of anti-money laundering training.
- D. Assess the risk of being fined for ineffective anti-money laundering practices.
Answer: A
NEW QUESTION # 32
According to The IIA's Code of Ethics, which of the following statements is true?
- A. When an internal auditor limits the scope of the audit engagement after learning that management is hiding relevant information, he demonstrates integrity.
- B. When an internal auditor disagrees with the treatment received by workers in the organization's foreign subsidiary and alters the audit program to highlight the issue, he fails to demonstrate objectivity.
- C. When an internal auditor releases required information to a regulator, resulting in a significant loss through fines and penalties for the organization, he fails to add value.
- D. When an internal auditor continues with an audit engagement, despite the audit client's claims that the work performed is unnecessary and redundant he fails to demonstrate competency.
Answer: B
NEW QUESTION # 33
When conducting an interview, an internal auditor is most likely to ask open-ended questions in order to:
- A. Determine agreement or disagreement with a stated viewpoint.
- B. Obtain specific answers and maximize efficiency.
- C. Obtain information based on the person's own perspective.
- D. Gather factual data on several different topics.
Answer: C
NEW QUESTION # 34
A credit card company detects potential errors in credit card numbers by checking whether all entered numbers contain the correct amount of digits. This is an example of which of the following IT controls?
- A. Data integrity tests.
- B. Balancing control activities.
- C. Check digits.
- D. Logic test.
Answer: D
NEW QUESTION # 35
What should the internal auditor's role be in assessing the organization's ethical climate?
- A. Maintain a whistleblower hotline to identify inappropriate or illegal activity within the organization.
- B. Perform background checks of potential new employees before they are hired by the organization.
- C. Perform ongoing surveys of the employees, customers, and partners of the organization to assess the organization's ethical climate. ^Evaluate the effectiveness of the organization's strategies and B.
processes for achieving the desired level of legal and ethical compliance.
Answer: A
NEW QUESTION # 36
Which of the following statements accurately describes an internal auditor's responsibility with regard to due professional care?
- A. An internal auditor's opinion should be based on factual evidence.
- B. An internal auditor's opinion should be based on experience and free of all bias.
- C. An internal auditor's opinion should be limited to the effectiveness of internal controls.
- D. An internal auditor should express an opinion only when consensus with top management has been achieved.
Answer: A
NEW QUESTION # 37
According to the International Professional Practices Framework, which of the following are allowable activities for an internal auditor?
1. Advocating the establishment of a risk management function.
2. Identifying and evaluating significant risk exposures during audit engagements.
3. Developing a risk response for the organization if there is no chief risk officer.
4. Benchmarking risk management activities with other organizations.
5. Documenting risk mitigation strategies and techniques.
- A. 4 and 5 only.
- B. 1.2, and 3 only.
- C. 1.2. 4. and 5 only.
- D. 2. 3. 4. and 5 only.
Answer: C
NEW QUESTION # 38
A large trucking organization wants to reduce traffic accidents by improving its system of internal controls.
Which of the following controls is correctly classified?
1. Review of speeding violations to identify repetitive locations and drivers is an example of a preventive control.
2. Defensive driver training is an example of a directive control.
3. The installation of tracking devices in delivery vehicles is an example of a corrective control.
4. Providing a vehicle driver handbook is an example of a detective control.
- A. 1 and 4.
- B. 3 and 4.
- C. 2 and 3.
- D. 1 and 2.
Answer: D
NEW QUESTION # 39
Which of the following is a common type of payroll fraud?
- A. Unearned bonuses or commissions.
- B. Skimming.
- C. Fictitious employees.
- D. Unauthorized overtime.
Answer: C
NEW QUESTION # 40
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 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.
- B. The requirements for reporting quality assessment results are the same for external assessments and self-assessments with independent external validation.
- C. 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.
- D. 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.
Answer: D
NEW QUESTION # 41
An internal auditor is using a spreadsheet application to review a cash flow forecast prepared by management.
Which of the following correctly identifies the type of evidence this information represents?
- A. Competent, corroborative evidence of future working capital requirements.
- B. Sufficient, circumstantial evidence of the future solvency of the organization.
- C. Sufficient, analytical evidence of the cash flow position at a given point of time in the future.
- D. Competent, documentary evidence of future cash flow changes within the organization.
Answer: D
NEW QUESTION # 42
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