Question 1

An internal audit charter describes the mission and scope of the internal audit activity (IAA), responsibilities of the IAA, accountability of the chief audit executive, independence of the IAA, and standards followed by the IAA. Which of the following also should be included in the charter?

Options :

A : The purpose of the IAA.

B : The IAA-s right to have unrestricted access to functions, records, personnel, and physical property.

C : A detailed audit plan or program for the year.

D : The job specifications and descriptions of the internal audit staff.

Answer: B

Question 2

Which of the following would be considered a preventive control?

Options :

A : A library control log.

B : A review of exception reports.

C : A password lock on a server.

D : A software scan of financial records for irregularities.

Answer: C

Question 3

According to IIA guidance, which of the following is not a responsibility of the chief audit executive pertaining to documenting information to support internal audit engagement results and conclusions?

Options :

A : Rating each engagement record to assess its relevance and accessibility for the organization-s board.

B : Controlling access to engagement records, including access by senior management.

C : Developing retention requirements for engagement records that are consistent with organizational guidelines.

D : Forming policies governing the custody and retention of consulting engagement records before their release to other parties.

Answer: A

Question 4

Which of the following conditions is the most likely indicator of fraud?

Options :

A : Commissions are paid based on verified increases to sales.

B : Departmental reports are consistently issued in an untimely manner.

C : A manager regularly assumes subordinates' duties.

D : Lower earnings occur during the industry-s down cycle.

Answer: C

Question 5

An internal audit charter, approved by the board, restricts the internal audit activity to providing assurance only on the reliability of financial information and the effectiveness of internal accounting controls. Which of the following statements is true regarding the extent to which the external auditor may rely on the internal audit activity's work?

Options :

A : The external auditor may make full use of the work, as the audit charter is very specific as to the work the internal audit activity may undertake.

B : The external auditor may use the work, as the board has approved the charter, thus taking responsibility for any deficiencies.

C : The external auditor must disregard the work, as the scope of the charter may introduce bias and result in a lack of due professional care.

D : The external auditor may use the work with caution, due to the internal audit activity-s scope and responsibility restrictions.

Answer: D

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