The chief audit executive (CAE) should determine whether the internal audit activity has confirmed the status of all of management's corrective actions. Doing so would help the CAE assess which of the following?
A. Disclosure risk.
B. Residual risk.
C. Compliance risk.
D. Inherent risk.
An internal auditor receives a document displaying all the steps of a process and the path taken as transactions flow between each step of the process. How is the internal auditor most likely to use this document during the engagement?
A. To perform an assessment of the adequacy of process controls.
B. To perform an assessment of the effectiveness of process controls.
C. To perform a detailed assessment of process risks.
D. To perform an assessment of the sufficiency of residual process risks.
An internal auditor is conducting an initial risk assessment of an audit area and wants to assess management's compliance with privacy laws for safeguarding customer information stored on the organization's servers. Which course of action is appropriate for this phase of the engagement?
A. Solicit the services of a specialist information systems auditor.
B. Obtain the most current approved copies of the organization's privacy policy.
C. Consult with legal counsel about new privacy laws to establish appropriate criteria.
D. Consider the detection risk of noncompliance with the laws.
An internal auditor for a regional bank suspects that the head of commercial lending has been granting loans without the required collateral. Which of the following sampling techniques will be most effective for investigating the auditor's suspicion?
A. Variables sampling.
B. Dollar-unit sampling.
C. Judgmental sampling.
D. Discovery sampling.
Which of the following is one of the five basic financial statement assertions when an internal auditor evaluates controls over financial reporting?
A. Reliability or appropriateness.
B. Reasonableness.
C. Existence or occurrence.
D. Relevance.
Which of the following statements concerning workpapers is the most accurate?
A. The organization and the format of workpapers is the same for all engagements.
B. The extent of what is included in workpapers is a matter of professional judgment.
C. Workpapers should be complete so that every conceivable question that can be raised should be answered.
Which of the following statements is true regarding the final assurance engagement report issued to management?
A. Ratings are only used to assess the condition of an observation made by an internal auditor.
B. Audit findings may be communicated to management prior to issuance of the final approved audit report.
C. Communications must be relevant, logical, and free from errors before they are disseminated.
D. The audit report must present the information in the following order: (1) audit scope, (2) engagement objectives, and (3) engagement results.
Which of the following would present the most critical external risk to an organization?
A. The organization experiences a merger, and the management team is reorganized and redistributed globally.
B. The organization launches a product into new global markets.
C. After minimal testing, the organization implements a new system to replace a legacy system.
D. Regulators announce broad legislative reforms applicable to the industry within which the organization operates.
A chief audit executive (CAE) reviews the supervision of an internal audit engagement. Which of the following would most likely assure the CAE that the engagement had adequate supervision?
A. The engagement supervisor has an open door policy for audit team members to discuss concerns.
B. The supervisor reviews weekly progress reports from the audit team members.
C. The supervisor reviews and initials internal audit workpapers for the engagement.
D. The supervisor meets periodically with management in the reviewed area to get feedback during the engagement.
Some time after the final audit report was issued, the engagement supervisor learned that several internal control deficiencies were not remedied, despite management's previous agreement to remedy them. According to IIA guidance, which of the following is the most appropriate response?
A. The engagement supervisor must notify the chief audit executive (CAE) that the deficiencies have not been rectified.
B. The engagement supervisor should rely on professional judgment as to whether the CAE should be informed, or the management action plan should be adjusted.
C. The engagement supervisor should rely on his negotiation skills and issue an ultimatum to management to remedy the control deficiencies.
D. Ensure that these deficiencies are captured in the documentation as high-priority areas to be reviewed during the next audit.
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