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Questions # 21:

A multinational organization has asked the internal audit activity to assist in setting up the organization's risk management system. The chief audit executive (CAE) agrees to take on the engagement as a consultant. Which of the following tasks is appropriate for the CAE to undertake?

Options:

Coordinate and facilitate risk workshops for management to attend.

Establish the degree of risk appetite for management to accept.

Set risk indicators and mitigation plans for management to implement.

Determine the number of significant risks for management to report to the board.

Expert Solution

Questions # 22:

Which of the following scenarios best illustrates a rationalization as the root cause of potential fraud?

Options:

Managers who have been with the organization for several decades become aware that newly hired, younger managers are being moved more quickly into senior positions.

The controller at a nationwide manufacturing company recently opted to no longer require two-week mandatory vacations for accounting staff.

Security cameras that monitor cash handling at the register are not functioning.

The organization is slowly phasing out three mature products that produce the highest commissions for the sales staff.

Expert Solution

Questions # 23:

Forty-five percent of an organization's customer payments are submitted online. Eight percent of online payments are rejected. Executive management decides to outsource its online payment services to a contractor that will assume 75 percent of the total value of rejected payments. The organization estimates $1.25 million customer payments due during the contract period.

Which of the following represents the organization's residual risk for online customer payments due?

Options:

$11, 250

$25, 000

$33, 750

$45, 000

Expert Solution

Questions # 24:

According to IIA guidance, which of the following is least compliant with the requirements regarding an internal auditor's need for objectivity?

Options:

An internal auditor assessed the effectiveness of controls over payroll software, which he had helped implement with a previous employer.

An internal auditor participated in an audit of controls around absenteeism, despite providing some consultation on controls in this area earlier in the year.

An internal auditor performed an assurance engagement for the effectiveness of accounts payable access controls, one of which he previously helped to design.

An internal auditor, previously employed in the quality assurance operations area, performed a consulting engagement for the operations manager.

Expert Solution

Questions # 25:

Which of the following behaviors could represent a significant ethical risk if exhibited by an organization's board?

Options:

Requesting a private meeting with senior management, without the presence of the chief audit executive.

Intervening during an audit involving ethical wrongdoing.

Discussing periodic reports of ethical breaches.

Authorizing an investigation of an unsafe product.

Expert Solution

Questions # 26:

An internal auditor is conducting an assessment of the organization's fraud prevention program using the COSO enterprise risk management framework. According to this framework, which of the following activities would fall under the control environment component for preventing fraud?

1. The organization uses an automated authority approval matrix to control payments.

2. The organization has a whistleblower hotline that is available to employees.

3. Annually, every manager completes a comprehensive fraud assessment of his or her department.

4. Annually, the organization reviews and communicates the code of expected behavior.

Options:

1 and 2.

1 and 3.

2 and 3.

2 and 4.

Expert Solution

Questions # 27:

Which of the following is most likely to enhance an internal auditor's objectivity?

Options:

An auditor is appropriately able to communicate results.

An auditor performs his work free from interference.

An auditor is unrestricted in determination of scope.

An auditor avoids conflicts of interest.

Expert Solution

Questions # 28:

Which of the following factors should be considered when determining the appropriate combination of manual techniques and computer-assisted audit techniques (CAATs) to be used during an audit?

1. Acceptance of CAATs findings by entity management.

2. Computer knowledge and expertise of the auditor.

3. Time constraints.

4. Level of audit risk.

Options:

1 and 4

2 and 3 only

1, 2, and 3

2, 3, and 4

Expert Solution

Questions # 29:

What is the primary benefit to the internal audit activity for undertaking an internal quality assessment?

Options:

To help the internal audit activity complete its annual assurance plan.

To identify inefficiencies within the internal audit team.

To help improve the overall quality of the internal audit activity's work.

To identify key risks and areas of concern within the organization.

Expert Solution

Questions # 30:

According to IIA guidance, which of the following should be formally documented in the internal audit charter?

Options:

The internal audit activity's responsibility for imposing risk management processes.

The internal audit activity's responsibility for the organization's governance framework.

The nature of consulting services provided by the internal audit activity.

The budgeting process for the internal audit activity.

Expert Solution

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