Question 1

Management asked the internal audit activity to evaluate the appropriateness of selfinsuring against casualty losses and health care for the organization's employees. Should the chief audit executive engage an actuarial consultant to assist in the audit engagement if these skills do not exist on staff?

Options :

A : Yes, because an actuarial consultant is essential to determine whether the health-care costs are reasonable.

B : Yes, because an actuarial consultant has skills, not usually found in the internal audit activity, to identify and quantify self-insurance risks.

C : No, because it is a normal audit function to assess risk; this audit engagement is therefore not unique.

D : No, because the internal audit activity is skilled in assessing controls and the insurance control concepts are not distinctly different from other control concepts.

Answer: B

Question 2

Internal audit management should annually perform which of the following?

Options :

A : Skill gap assessment

B : Education gap assessment

C : Talent gap assessment

D : Competency gap assessment

Answer: D

Question 3

Which of the following would be a common benefit of using generalized audit software?

Options :

A :

It enables internal auditors to perform tests on data with the assistance of the organization-s IT personnel.

B : It enables internal auditors to analyze very large quantities of data.

C : It eliminates the need to obtain access privileges to relevant and reliable data.

Answer: B

Question 4

Compliance programs assist organizations by doing which of the following?I. Evaluating business continuity.II. Determining director and officer liability.III. Evaluating disaster recovery plans.

Options :

A : I, II, and Ill.

B : I only.

C : I and II only.

D : II only.

Answer: D

Question 5

Management has requested an audit of promotional expenses. The sales department has been giving away items in conjunction with new product sales to stimulate demand. The promotion is successful, but management believes the cost may be too high. The least useful procedure to determine the effectiveness of the promotion is

Options :

A : D.A comparison of the unit cost of the products sold before and during the promotion period.

B : B.A review of the sales department’s reasons for believing that the promotion has been successful.

C : C.A comparison of product sales during the promotion period with sales during a similar nonpromotion period.

D : A.An analysis of marginal revenue and marginal cost for the promotion period and the prior period.

Answer: A

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