Question 1

Topic 3 - Volume C

Which of the following would be the best example of a monitoring control for a chain of restaurants?

Options :

A : Each restaurant manager reconciles the cash received with the food orders recorded on the computer.

B : All food orders must be entered through the computer, and there is segregation of duties between the food servers and the cooks.

C : Corporate management prepares a detailed analysis of gross margin per restaurant and investigates those showing a significantly lower gross margin.

D : Proof of bank deposit is transmitted to corporate headquarters on a daily basis.

Answer: C

Question 2

Which fraudulent act is designed primarily to benefit the organization?

Options :

A : Fictitious sale or assignment of assets.

B : Authorization of payment for hours not worked.

C : Theft or misappropriation of funds.

D : Acceptance of bribes or kickbacks.

Answer: A

Question 3

At what point in time can an organization conclude that the established organizational governance framework was correctly implemented?

Options :

A : When the internal auditor conducts observations and fieldwork.

B : When management completes the risk assessment.

C : When the internal auditor evaluation shows its soundness.

D : When the organization’s goals and objectives are met.

Answer: D

Question 4

The largest risks facing an organization should be mitigated by which type of controls?

Options :

A : Entity-level.

B : Activity-level.

C : Transaction-level.

D : Process-level.

Answer: A

Question 5

A chief audit executive (CAE) for a specialty retailer is asked by management to review the controls in place to manage their electronic funds transfer process.

The internal audit activity has no experience with similar engagements. What is the most appropriate course of action for the CAE to take?

Options :

A : Plan the engagement and begin fieldwork using existing staff.

B : Attempt to discourage management from the request.

C : Hire an outside consulting firm to assist with the engagement.

D : Defer the audit until current staff can be appropriately trained.

Answer: C

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