Question 1

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 2

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 3

After being terminated due to downsizing, an internal auditor finds a different job with an organization in the same industry. Which of the following actions would violate the IIA Code of Ethics?

Options :

A : To determine audit priorities in the new job, the auditor uses the audit risk approach that the auditor-s previous employer used, without receiving permission to do so.

B : At the new organization, the auditor is asked to develop forms to implement probability-proportional-to-size sampling. Although unsure of how to perform this type of sampling, the auditor proceeds without asking for assistance.

C : In preparing for an audit at the previous organization, the auditor had conducted a great deal of research on the Internet at home to identify best practices for the management of a treasury function. The auditor has retained much of the research and uses it to conduct an audit of the new employer-s treasury function.

D : In the first week at the new organization, the auditor discovers a high fraud risk surrounding the organization-s database and suggests that the information technology department implement a new password system to prevent fraudulent actions before they occur.

Answer: B

Question 4

Non-statistical sampling does not require which of the following?

Options :

A : The sample to be representative of the population.

B : The sample to be selected haphazardly.

C : A smaller sample size than if selected using statistical sampling.

D : Projecting the results to the population.

Answer: C

Question 5

Which of the following best demonstrates the authority of the internal audit activity?

Options :

A : Suggesting alternatives to decision makers.

B : Improving the integrity of information.

C : Determining the scope of internal audit services.

D : Achieving engagement objectives.

Answer: C

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