Question 1

An internal auditor using the five-attribute approach to document deficiencies in a warehouse shipping process. Which of the following attributes will be included in the workpapers?

Options :

A : Risk, impact likelihood existing control, recommendation

B : Condition, cause, effect, recommendation

C : Condition, cause effect test result

D : Risk, impact test result recommendation

Answer: B

Question 2

Which of the following recommendations made by the internal audit activity (IAA) is most likely to help prevent fraud?

Options :

A :

A review of password policy compliance found that employees frequently use the same password more than once during a year. The IAA recommends that the access control software reject any password used more than once during a 12-month period.

B :

A review of internal service-level agreement compliance in financial services found that requests for information frequently are fulfilled up to two weeks late. The IAA recommends that the financial services unit be eliminated for its ineffectiveness.

C :

A vacation policy compliance review found that employees frequently leave on vacation before their leave applications are signed by their manager. The IAA recommends that the manager attend to the leave applications in a more timely fashion.

D :

A review of customer service-level agreements found that orders to several customers are frequently delivered late. The IAA recommends that the organization extend the expected delivery time advertised on its website.

Answer: A

Question 3

Which of the following statements is true pertaining to interviewing a fraud suspect?

1. Information gathered can be subjective as well as objective to be useful.

2. The primary objective is to obtain a voluntary written confession.

3. The interviewer is likely to begin the interview with open-ended questions.

4. Video recordings always should be used to provide the highest quality evidence

Options :

A : 1 only

B : 4 only

C : 1 and 3

D : 2 and 4

Answer: C

Question 4

Which of the following best describes external benchmarking using trend analysis for a subsidiary of an international company?

Options :

A :

Comparing the current ratio of the subsidiary with the current ratio of another company for the same period

B :

Comparing common-size financial statements of the subsidiary with the averages of the industry for the last two periods

C : Comparing the sales of the subsidiary with the sales of another subsidiary for the last two periods.

D : Comparing the sales of the subsidiary with the budgeted figures for the last two periods

Answer: B

Question 5

During an assurance engagement, an internal auditor discovered that a sales manager approved numerous sales contracts for values exceeding his authorization limit. The auditor reported the finding to the audit supervisor, noting that the sales manager had additional new contracts under negotiation. According to IIA guidance, which of the following would be the most appropriate next step?

Options :

A : The audit supervisor should include the new contracts in the finding for the final audit report.

B :

The audit supervisor should communicate the finding to the supervisor of the sales manager through an interim report.

C :

The audit supervisor should remind the sales manager of his authority limit for the contracts under negotiation.

D :

The auditor should not reference the new contracts, because they are not yet signed and therefore cannot be included in the final report.

Answer: B

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