Which of the following methods is not valid for completing continuing professional education hours?
A. Attending technical session meetings held by state auditing organizations.
B. Completing all audit engagements in accordance with the Standards.
C. Publishing an article on the organization's internal audit department.
D. Participating in a formal in-house training program.
Which of the following statements regarding an internal auditor's responsibility for detecting fraud is not correct?
A. The auditor should have sufficient knowledge to detect red flags.
B. The auditor may obtain assistance from outside experts in areas where the auditor is not sufficiently proficient.
C. The auditor should identify control weaknesses which could allow fraud to occur.
D. The auditor should detect fraud before recommending a fraud investigation should take place.
Which of the following statements about risk assessment is true?
A. Risk assessment focuses on the quantitative evaluation of exposures.
B. Risk assessment evaluates risk both on an inherent and residual basis.
C. Risk assessment determines the organization's tolerance for exposure.
D. Risk assessment is the amount of inherent risk in a separately identifiable business entity.
Which of the following would be outside the scope of acquiring and developing human resources for an internal audit department?
A. Requiring audit staff to participate in continuing education activities.
B. Writing job descriptions for audit staff, audit managers, and other auditing positions.
C. Conducting individual counseling sessions regarding professional development and performance.
D. Evaluating auditors' compliance with standards and level of audit effectiveness.
An internal audit activity has made a preliminary determination that a division of the organization has employed improper accounting practices.
Upon being informed, the head of the organization instructs the chief audit executive (CAE) to cease the investigation and to withhold the information from external auditors.
Which course of action should the CAE follow?
A. Report the communication to the organization's general counsel.
B. Report the instruction to the chairperson of the audit committee.
C. Inform the head of the organization that the investigation will continue as planned.
D. Inform the external auditors of the findings and the mandate to stop investigating.
For a bank handling large amounts of cash, which of the following types of control would be the most effective to use?
A. Detective controls.
B. Corrective controls.
C. Preventive controls.
D. Directive controls.
Which of the following roles, if undertaken by an internal auditor, would have the greatest potential for conflict with the Standards regarding objectivity?
A. IT system designer.
B. Product development team consultant.
C. Ethics advocate.
D. External audit liaison.
The internal audit staff lacks the expertise to perform a specific activity when auditing an organization. Which of the following individuals is not an appropriate choice to perform this task?
A. A consultant from an outside firm.
B. An expert within the department being audited.
C. A researcher affiliated with a college or university.
D. A specialist from the staff of a government agency.
Line management of a manufacturing operation requests an operational audit. They are seeking recommendations for policies and procedures to enhance control over the operation. What should the internal audit activity do?
A. Review the effectiveness of current policies and procedures but avoid making control recommendations due to impaired objectivity.
B. Perform the engagement and make appropriate recommendations for policies and procedures.
C. Turn down the engagement because recommending controls would impair future objectivity regarding this client.
D. Turn down the engagement because an operational audit should not review policies and procedures.
Which of the following activities would be most likely to impair the objectivity of an internal auditor?
A. Performing reviews of procedures for a new information systems application before it is installed.
B. Benchmarking controls during the development of a new information systems application.
C. Assisting with the development and installation of a new information systems application.
D. Developing recommended controls for the use of a new information systems application.
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