Question 1

The chief audit executive is revising policies relating to independence and objectivity of the internal audit activity. Which of the following would be a part of the revised policies document?

Options :

A : Any auditor that received high-value gifts from an audit client must report it to their supervisor.

B : Any auditor that received gifts of low-value promotional items from an audit client must report it to their supervisor.

C : An auditor does not need to complete an annual conflict of interest form unless the auditor-s independence status has changed.

D : An auditor may provide consulting services relating to operations for which they had previous responsibilities.

Answer: D

Question 2

When planning the work program for an assurance engagement, an internal auditor should first review the department's business objectives and then:

Options :

A : Identify risks.

B : Review controls.

C : Determine scope.

D : Evaluate vulnerabilities.

Answer: A

Question 3

An internal auditor for a large retail chain suspects that a store manager has been stealing money from cash sales by listing the sales as accounts receivable and then writing off the accounts as bad debts. Which of the following irregularities is the most likely cause of the auditor's suspicion?

Options :

A : A much higher bad debt expense as a percentage of sales than that of previous years.

B : A much higher bad debt expense as a percentage of sales than that of other stores.

C : A much higher percentage of past-due accounts receivable than that of other stores.

D : A much higher percentage of past-due accounts receivable than that of previous years.

Answer: B

Question 4

To enhance the independence of both the internal and external audit functions, audit committees should be composed of:

Options :

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.

Answer: D

Question 5

Which of the following best describes the approach the internal audit activity should take to assess and make appropriate recommendations to improve the organization?

Options :

A : To evaluate an organization-s governance processes for making strategic and operational decisions, internal auditors should review the organization-s policies and processes related to staff compensation.

B : To determine how an organization provides oversight of its risk management and control activities, internal auditors should review board meeting minutes and the board policy manual.

C : To assess how an organization promotes ethics and values, both internally and among its external business partners, internal auditors should review the organization-s related objectives, programs, and activities.

D : To evaluate how an organization ensures effective performance management and accountability, internal auditors should review previously conducted risk assessments

Answer: B

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