QUESTION: 1 Which of the following audit findings would have the least impact (either positive or negative) on a department's control environment?
A. The department makes long-term investment risk decisions to maximize return on investment. B. The department manager sets and demonstrates a tone of honesty and integrity in all business dealings. C. any department functions are duplicated or verified by other department employees. D. Deficiencies were found in the appropriate authorization of transactions.
QUESTION: 2 According to the Standards, which of the following best describes the concept of due professional care?
A. Internal auditors must apply the diligence and skill expected of a reasonably prudent and competent internal auditor. B. Internal auditors must possess the knowledge, skills, and other competencies needed to perform their audit responsibilities. C. Internal auditors must have sufficient knowledge to identify fraud. D. Internal auditors must refrain from participating in an engagement when they lack sufficient knowledge, skills, and competencies to assess the audit area fully.
QUESTION: 3 Which of the following is not true with regard to the internal audit charter?
A. It defines the authorities and responsibilities of the internal audit activity. B. It specifies the minimum resources needed for the internal audit activity. C. It provides a basis for evaluating the internal audit activity. D. It should be approved by senior management and the board.
QUESTION: 4 In assessing the independence of the internal audit activity, a member of a peer review team should consider all of the following factors except
A. Access to and frequency of communications with the board of directors or its audit committee. B. The criteria of education and experience considered necessary when filling vacant positions on the audit staff. C. The degree to which auditors assume operating responsibilities. D. The scope and depth of engagement objectives for the audit engagements included in the review.
QUESTION: 5 To enhance the independence of both the internal and external audit functions, audit committees should be composed of
A. A rotating subcommittee of the board of directors or its equivalent. B. A combination of external members of the board of directors and company officers. C. Members from all important constituencies, specifically including representatives from banking, labor, regulatory agencies, shareholders, and officers. D. Only external members of the board of directors or other similar oversight committees.
QUESTION: 6 According to the Standards, the organizational status of the internal audit activity
A. Must be sufficient to permit the accomplishment of its audit responsibilities. B. Is best when the reporting relationship is direct to the board of directors. C. Requires the board's annual approval of the audit schedules, plans, and budgets. D. Is guaranteed when the charter specifically defines its independence.
QUESTION: 7 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. Monitoring the allowance for doubtful accounts. B. Writing procedures for the handling of duplicate payments.
C. Signing timekeeping cards for subordinates. D. Reviewing shipping documents for accuracy.
QUESTION: 8 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...
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