Question 1

Which of the following is not true regarding the management of internal audit resources?

Accepted Answer

Skills availability must be aligned with financial constraints is not true regarding the management of internal audit resources.

Question 2

During a consulting engagement, an internal auditor identifies new risks which will impact the scope and sufficiency of the engagement audit plan. According to the Standards, the internal auditor should:

Accepted Answer

The internal auditor should discuss the potential impact on the scope with the client to ensure that the engagement remains relevant and effective in addressing the identified risks. This aligns with the Standards which emphasize communication and collaboration with the client when significant changes occur.

Question 3

While developing a risk based audit plan, which of the following sources of information would provide the least value to the chief audit executive?

Accepted Answer

User acceptance testing of the organization's enterprise resource planning application is more focused on technical functionality rather than providing a broad view of risks, making it less valuable for developing a risk-based audit plan.

Question 4

Which of the following is correct with respect to roles within an enterprise-wide risk management process? 1. The board provides oversight to the risk management process. 2. Executive management owns the risk management framework. 3. Senior management is assigned ownership of risks. 4. Internal audit modifies the risk assessment determined by management.

Accepted Answer

The board provides oversight, executive management owns the framework, and senior management is assigned ownership of risks. Internal audit does not modify risk assessments but provides independent assurance.

Question 5

Which of the following would be included in an internal audit department's quality assurance and improvement program? 1. Ongoing internal assessments of the performance of the internal audit department. 2. Periodic internal reviews through self-assessments. 3. Assessments conducted by a qualified external reviewer at least once every five years.

Accepted Answer

A quality assurance and improvement program for an internal audit department typically includes ongoing internal assessments, periodic internal reviews through self-assessments, and external assessments by a qualified reviewer at least once every five years to ensure compliance with standards and continuous improvement.

Question 6

An organization has an opening for an entry-level internal audit position. When interviewing for the position, which of the following is the least important skill for an entry-level internal auditor?

Accepted Answer

Conflict resolution skills are generally more critical for roles involving negotiation or managing disputes, whereas entry-level internal audit positions focus more on analytical, communication, and organizational skills.

Question 7

According to the Standards, which of the following is applicable to the internal audit activity's quality assurance and improvement program?

Accepted Answer

The Standards require that all aspects of the internal audit activity be evaluated as part of the quality assurance and improvement program. This ensures a comprehensive assessment of the internal audit function's effectiveness and adherence to standards.

Question 8

An organization decides to create an internal audit function and hires a new chief audit executive (CAE). Which of the following should the CAE first consider when developing the internal audit process?

Accepted Answer

The CAE should first consider aligning the internal audit objectives with the organization's strategic plan to ensure that the audit function supports the overall goals and priorities of the organization.

Question 9

Which of the following is true regarding roles and responsibilities in risk management processes?

Accepted Answer

Acceptance of residual risk typically resides with executive management, as they are responsible for making decisions about the level of risk the organization is willing to accept in pursuit of its objectives.

Question 10

An organization has adopted an enterprise-wide risk management process and has appointed a chief risk officer (CRO) to manage the process. The board has requested that the audit committee have oversight over the risk management function. Which of the following statements is not true regarding this situation?

Accepted Answer

The answer of An organization has adopted an enterprise-wide risk...

Question 11

When determining if appropriate resources exist to achieve engagement objectives, which of the following factors should a chief audit executive consider? 1. Nature and complexity of the audit engagement. 2. Time constraints. 3. Effectiveness of the audit committee. 4. Availability of resources for the engagement.

Accepted Answer

The chief audit executive should consider the nature and complexity of the audit engagement, time constraints, and the availability of resources for the engagement to ensure that the objectives can be achieved effectively. The effectiveness of the audit committee is not directly related to resource availability for a specific engagement.

Question 12

Management requested the chief audit executive (CAE) to include an audit of the organization's health and safety program in next year's annual audit plan. However, the internal audit department has no expertise in this area. Which of the following would be the most appropriate action by the CAE?

Accepted Answer

The CAE should communicate with management about the lack of expertise and discuss alternative strategies, ensuring that the audit is conducted effectively and with the necessary expertise.

Question 13

While preparing the annual audit plan, the newly assigned chief audit executive (CAE) learns that the organization has not yet implemented a risk framework. Which of the following would be the most appropriate action for the CAE to take regarding potential engagements?

Accepted Answer

Consulting with senior management and the board to make adjustments regarding risk is the most appropriate action, as it aligns the audit plan with the organization's current risk environment and priorities, especially in the absence of a formal risk framework.

Question 14

Which of the following is not a reason for an internal auditor to prepare an audit plan before the detailed audit work begins?

Accepted Answer

An audit plan is primarily for the internal auditor's use to ensure a systematic approach to the audit. Informing management about the work to be performed is not a reason for preparing the audit plan; it is more about communication and coordination rather than planning.

Question 15

Which of the following would be the most important reason for the chief audit executive (CAE) to use inputs from management strategy to update the audit universe?

Accepted Answer

Understanding the organization's strategic plan, including its attitude toward risk and the challenges in achieving objectives, is crucial for the CAE to ensure that the audit universe aligns with the organization's priorities and risk profile.

Question 16

During the planning phase of an audit of the treasury function, an internal auditor conducted a risk assessment of the function in order to:

Accepted Answer

The primary purpose of conducting a risk assessment during the planning phase is to identify areas that may require more focus during the audit, helping to set engagement objectives.

Question 17

An organization has a large number of vendors supplying goods to its various branches across the region. The code of conduct statements signed by the employees specify that the employees or their families will not sell goods to the organization. However, during the internal audit of a branch, the internal auditor suspected that some of the employees may be supplying goods to the organization contrary to the code of conduct. The chief audit executive has requested that a thorough review be completed to identify the potential employee vendors. Of the following tests, it would be least useful to compare [List A] with [List B]. [List A] [List B]

Accepted Answer

Comparing the dates of payments to vendors with the dates of salary payments to employees is least useful because payment dates do not directly indicate a relationship between employees and vendors.

Question 18

Ordinarily, which of the following would not be an objective of an internal audit quality assurance review?

Accepted Answer

Ensuring that the internal audit activity meets the external auditor's expectations is not an objective of an internal audit quality assurance review because it is not a requirement of the International Standards for the Professional Practice of Internal Auditing (IIA Standards).

Question 19

Which of the following are key characteristics of enterprise risk management? 1. It considers risk in the formulation of strategy. 2. It applies risk management in some units of an entity. 3. It takes a portfolio view of risks throughout the enterprise. 4. It restricts the organization's ability to seize opportunities inherent in future events.

Accepted Answer

Enterprise risk management considers risk in strategy formulation and takes a portfolio view of risks across the enterprise, ensuring a comprehensive approach.

Question 20

When establishing the internal audit activity's annual plan, which of the following would be the best source of potential audit engagement topics?

Accepted Answer

The answer of When establishing the internal audit activity's annual...

Exam 4: Conducting the Internal Audit Engagement