Which characteristic of risk assessment makes it a useful tool for audit planning?
A. It provides a list of auditable activities in the organization.
B. It ranks the severity of potentially adverse effects on the organization.
C. It provides a process for identifying and analyzing potentially adverse effects.
D. It evaluates the probability that an event or action may adversely affect the organization.
Why should internal auditors develop a strong relationship with the external auditors?
A. External auditors offer an additional layer of approval to internal auditors' reports.
B. External auditors can help improve the effectiveness of internal control sampling techniques.
C. External auditors can offer an independent and knowledgeable viewpoint.
D. External auditors can share information gained from work with similar clients.
An internal auditor is planning an assurance engagement. The auditor first reviews the department's business objectives. What is the next step?
A. Review control activities.
B. Evaluate potential risks.
C. Establish risk management roles.
D. Set the scope of the engagement.
Which role is not considered a change agent when an organization wants to implement structural changes?
A. Senior management.
B. Line management.
C. Independent consultant.
D. Shareholder.
Because of an abundance of high priority requests from management, an internal audit activity no longer has the resources to meet all of its commitments contained in the annual audit plan. Which of the following would be the best course of action for the chief audit executive to follow?
A. Continue with the plan and seek opportunities to adjust priorities and reallocate resources.
B. Present a reassessment of the plan to the board and senior management for consideration.
C. Reassess the plan and either cancel or divert resources away from the lowest priority activities.
D. Advise the board immediately and seek their support for additional resources to meet the needs of the plan.
When performing a compliance audit of the organization's outsourced services, which of the following is considered the primary engagement objective?
A. Verifying that the organization does not have the appropriate knowledge and resources in-house.
B. Ensuring the provider has adequate internal controls in order to protect the quality of their service.
C. Evaluating the efficiency, effectiveness, economy, and sufficiency of the services provided.
D. Assessing the provider's adherence to contract and regulatory requirements.
Which of the following actions has the least influence on the chief audit executive's development of an audit plan?
A. Input from senior management and the board.
B. An evaluation of the complexity of each audit engagement.
C. Changes in the organizations structure or budget.
D. An assessment of risk and exposures affecting the organization.
In which of the following cases is it appropriate for an audit report to not contain management's response either within the report or as an attachment?
A. Management's response to an audit report is generally not a requirement.
B. Internal controls were found to be properly designed and operating effectively although operations are deemed inefficient.
C. There was insufficient time to obtain management's response during the draft reporting process.
D. An internal audit report contains no observations.
During an engagement, an internal auditor discovered that an organization's policy on delegation of authority listed six individuals who were no longer employed with the organization. In addition, four individuals acting with disbursement authority were not identified in the policy as having such authority. Which of the following is the most effective course of action to address the control weakness?
A. Immediately initiate a complete audit of the disbursement function to determine if significant frauds have occurred.
B. Recommend that management review the process supporting the policy and make improvements.
C. Advise management to add the four additional names and remove the incorrect names from the policy to make it current.
D. Review further to ensure that the four individuals do not have the appropriate authority through delegation.
According to the International Professional Practices Framework, which of the following statements is true regarding the use of the statement, "Conducted in Conformance with the International Standards for the Professional Practice of Internal Auditing," when communicating results of a seven-year-old internal audit activity?
A. The statement may be used only when conducting international engagements.
B. The statement may be used only if the results of the quality assurance and improvement program support the statement.
C. The statement may be used whether or not the internal audit department has an external quality assessment review or an independent validation of a self-assessment.
D. The statement should not be used for a consulting engagement.
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