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Q136. In order to provide the most useful information for an organization's risk management decisions, which of the following should be assessed?
A. Risk levels for future events based on the degree of uncertainty of those events and their cost of mitigation.
B. Inherent and control risks and their impact on the extent of financial misstatements.
C. Risk levels of current and future events,their effect on the achievement of the organization's objectives,and their underlying causes.
D. Risk levels of current and future events,their impact on the organization's mission,and the potential for the elimination of existing risk factors.
Answer: C
Q137. Which of the following actions would be considered a violation of the Standards?
I. Drafts of engagement communications were reviewed with the audit client to obtain input. The client's comments were considered when developing the engagement final communication.
II. An auditor participated as part of a development team to review the control procedures to be incorporated into a major computer application under development.
III.
Given limited resources, the chief audit executive performed a risk analysis to determine which functions to audit.
A.
IIonly
B.
I and IIIonly
C.
I,II,and III.
D.
None of the above.
Answer: D
Q138. An internal audit manager of a furniture manufacturing organization is planning an audit of the procurement process for kiln-dried wood. The procurement department maintains six procurement officers to manage 24 different suppliers used by the organization.
Which of the following controls would best mitigate the risk of employees receiving kickbacks from suppliers?
A. The periodic rotation of procurement officers' assignments to supplier accounts.
B. A pre-award financial capacity analysis of suppliers.
C. An automated computer report,organized by supplier,of any invoices for the same amount.
D. Periodic inventories of kiln-dried wood at the organization's warehouse.
Answer: A
Q139. Which of the following is considered a common red flag indicator in helping to uncover fraud?
A. Improper segregation of duties.
B. Repeated poor performance.
C. Termination from previous employer.
D. Experiencing financial difficulty.
Answer: D
Q140. When a risk assessment process has been used to construct an audit engagement schedule, which of the following should receive attention first?
A. The external auditors have requested assistance for their upcoming annual audit.
B. A new accounts payable system is currently undergoing testing by the information technology department.
C. Management has requested an investigation of possible lapping in receivables.
D. The existing accounts payable system has not been audited over the past year.
Answer: C
Q141. A company produces a product that consists of materials X, Y, and Z. The product is mixed so that:
-
The quantity of material X used is one-third more than that of material Y.
-
The quantity of material Y used is one-fourth less than that of material Z.
If the company used 24, 000 units of material Z during a period, what is a reasonable estimate of the amount of material X used?
A. 8,000
B. 18,000
C. 24,000
D. 32,000
Answer: C
Q142. According to IIA guidance, which of the following statements about working papers is false?
A. They assist in the implementation of recommendations.
B. They provide support for communication to third parties.
C. They demonstrate compliance with auditing standards.
D. They contribute to development of the internal audit staff.
Answer: A
Q143. When an external auditor unknowingly fails to modify an opinion on financial statements that are materially misstated, this is an example of:
A. An inherent risk.
B. A control risk.
C. An audit risk. D. A residual risk.
Answer: C
Q144. COBIT is primarily designed to:
A. Define auditing standards for information technology auditors.
B. Satisfy information technology regulatory requirements.
C. Provide guidance to govern information technology activities.
D. Assist technology professionals in interpreting technological specifications.
Answer: C
Q145. Which of the following best describes how the increased use of computerization may impact an auditor's assessment of the risk of fraud?
A. Access to assets may be available to information systems personnel as well as to computer users.
B. Computer controls are generally less effective than human review.
C. Overrides of key controls may require less collaboration.
D. Audit trails are less effective.
Answer: A
Q146. An organization's sales professionals are potentially abusing the use of cellular phones, resulting in an alarming increase in telephone expenses. Which of the following controls is least likely to curb this abuse?
A. Developing periodic reports to management that show type,length,and number of calls per sales professional,with related totals and comparisons.
B. Requiring sales professionals to pay monthly cellular phone bills and subsequently submit only business calls for reimbursement using an expense report process.
C. Requiring sales managers to approve monthly bills prior to payment,explain budget variances,and explain increases from previous periods.
D. Requiring authorization of the cellular phone bill payment by the manager of the telecommunications department.
Answer: D
Q147. Which of the following would not be a factor for senior management to consider when determining the internal audit activity's role in an organization's risk management process?
A. The extent to which the internal audit activity is outsourced.
B. The maturity level of risk management practices in the organization.
C. The competency of the internal auditors in risk management.
D. The nature of the business and the environment in which the organization operates.
Answer: A
Q148. A daily log of treasury dealers who exceeded their authorized limits serves as a:
A. Preventive control.
B. Detective control.
C. Feed-forward control.
D. Directive control.
Answer: B
Q149. When conducting an interview, an internal auditor is most likely to ask open-ended questions in order to:
A. Obtain specific answers and maximize efficiency.
B. Gather factual data on several different topics.
C. Determine agreement or disagreement with a stated viewpoint.
D. Obtain information based on the person's own perspective.
Answer: D
Q150. Which of the following components influences the risk consciousness of an organization's people and is the basis for all other components of enterprise risk management?
A. Objective setting.
B. Information and Communication.
C. Risk Assessment.
D. Internal Environment.
Answer: D