Exam 3: The Internal Audit Activity Role in Governance, Risk, and Control

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?

When using a risk assessment model to develop audit plans, it is essential that the chief audit executive take into account the:

An internal auditor is planning an audit of an organization where temporary employees are suspected of receiving pay for hours they have not worked. Which of the following tasks should not be performed at this stage in the audit?

A chief audit executive (CAE) of an international charity reports functionally to the audit committee of the board of directors and administratively to the charity's chief financial officer (CFO). Which of the following would impair the internal audit function's independence?

An employee who recently transferred into the internal audit activity has been assigned to audit the accounts payable system. Which function, if previously performed by the auditor, would represent a conflict of interest?

A candidate has applied for an entry level internal audit position. The candidate holds a CISA (Certified Information Systems Auditor) designation, and has six months of audit experience, but limited knowledge of accounting principles and techniques. According to the IIA guidance, which of the following is the most relevant reason for the chief audit executive to consider this candidate?

According to the International Professional Practices Framework, which of the following is the appropriate division of responsibilities for the coordination of internal and external audit efforts?

An internal auditor prepared a workpaper that consisted of a list of employee names and identification numbers as well as the following statement: "A statistical sample of 40 employee personnel files was selected to verify that they contain all documents required by company policy 501 (copy attached). No exceptions were noted." The auditor did not place any audit verification symbols on this workpaper. Which of the following changes would most improve the auditor's workpaper?

During a review of a division's operations, an internal auditor notes that sales and customer base are unchanged, while inventory and gross margin have increased significantly. Which of the following audit procedures would be most relevant in substantiating management's assertion that the gross margin increase is due to increased efficiency in manufacturing operations?

Which of the following processes or tools can be used as ongoing internal assessments of the performance of the internal audit activity? 1. Analyses of audit plan completion and cost recoveries. 2. Selective peer reviews of work papers by staff involved in the respective audits. 3. Self-assessment of the internal audit activity with on-site validation by a qualified independent reviewer. 4. Feedback from audit customers and stakeholders.

Which of the following is most likely to be an element of an effective compliance program?

In a well-developed management environment, the internal audit activity would.

An internal auditor is testing, on a sample basis, whether invoices paid between January 1 and December 31 are supported by appropriately approved purchase orders. Over 25, 000 invoices were paid during the fiscal year, which runs from the first of April to the end of March. The auditor sets the acceptable risk of assessing control risk too low at 5% and the tolerable deviation rate at 5%. The internal auditor consults the previous audit and sets the expected population deviation rate at 1%. Sample size (77) is selected from a table and rounded up to 80. No sample deviations were found. The upper deviation limit was 3.7%. Which of the following statements represents a valid conclusion regarding this information?

The primary role of the internal audit activity in regard to an organization's ethical climate is to:

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?

To identify those components of a telecommunications system that present the greatest risk, an internal auditor should first:

According to IIA guidance, which of the following statements is false regarding continuing professional education for the internal audit activity (IAA)?

When internal auditors are preparing workpapers for the testing stage of an engagement, which of the following guidelines should be observed? 1. Include copies of all client files that were reviewed for the audit. 2. Avoid the use of professional, industry-appropriate jargon and technical terms. 3. Indicate the original sources of all data and information used in the workpapers. 4. Leave blank space for cross-references to be completed during the post-audit process.

An internal auditor is researching the laws and regulations related to a city's grant program. Which of the following procedures is least relevant to this task?

In advance of a preliminary survey, a chief audit executive sends a memorandum and questionnaire to the supervisors of the department to be audited. What is the most likely result of that procedure?