Senior management requested that the internal audit activity perform a consulting project to assist in making a decision on a new software system. Which of the following would be used to determine the engagement objectives?
A. An assessment of risks to the business objectives.
B. An understanding of the engagement client's expectations.
C. The probability of significant errors, fraud, or noncompliance.
D. Criteria previously established by the board.
An internal auditor conducted interviews with several employees, documented the interviews, analyzed the summaries, and drew a number of conclusions. What sort of audit evidence has the internal auditor primarily obtained?
A. Documentary evidence.
B. Testimonial evidence.
C. Analytical evidence.
D. Physical evidence.
An internal auditor completed a review of expenses related to the launch of a new project. The auditor sampled 45 transactions approved by a senior project manager and identified 30 with questionable vendor documentation. Which of the following is the most appropriate conclusion for the auditor to include in the audit report?
A. The organization incurred excessive cost overruns that resulted in significant financial and legal risk to the project.
B. The organization experienced a potential conflict of interest.
C. The organization had weaknesses in its review process, which allowed questionable transactions with some vendors.
D. The organization allowed the project to launch without assurance that all transactions were regularly approved.
Which of the following is true about surveys?
A. A survey with open-ended questions is weaker than a structured interview.
B. A survey with closed-ended questions can produce quantifiable evidence.
C. A survey's participants are likely to volunteer information that was not specifically requested.
D. A survey, like inspections and confirmations, are best used to test the operating effectiveness of controls.
An internal auditor observes a double payment transaction on a supplier invoice during an accounts payable engagement. Which of the following steps would be the most effective in helping the auditor determine whether fraud exists?
A. Switch the existing assurance engagement into a fraud investigation engagement.
B. Extend the audit scope and perform additional testing of controls on other related areas.
C. Review the prior year's transaction volume and amounts paid compared to the prior year's budget.
D. Perform data analytics on the supplier's information, invoiced amounts, and payments performed.
An internal auditor is assigned to validate calculations on the organization's billing application. As part of the test, the internal auditor is required to use an automated audit tool to simulate transactions for testing. Which of the following would most appropriately be used for this purpose?
A. Generalized audit software.
B. Utility software.
C. Integrated test facilities.
D. Audit expert systems.
Which of the following actions best describes an internal auditor's use of test data to determine whether an organization's new accounts payable system avoids processing questionable invoices for payment?
A. Creating an automated tool that monitors the computer program on a daily basis for potential issues that need corrective actions.
B. Using an automated system that assists internal auditors with automating the risk analysis of the computer program for invoicing.
C. Embedding tools in the computer program to analyze the review processes of invoices for potential issues that may hamper payments.
D. Adding invoices to the computer program to assess the reliability and effectiveness of the review process and whether controls work.
An internal auditor tested whether purchase orders were supported by appropriately approved purchase requisitions. She sampled a population of purchase documents and identified instances where purchase requisitions were missing. However, she did not notice that in some cases purchase requisitions were approved by an unauthorized person. Which of the following risks most appropriately describes this situation?
A. Nonsampling risk.
B. Sampling risk.
C. Inherent risk.
D. Due diligence risk.
A corporate merger decision prompts the chief audit executive (CAE) to propose interim changes to the existing annual audit plan to account for emerging risks. Which of the following is the most appropriate action for the CAE to take regarding the changes made to the audit plan?
A. Present the revised audit plan directly to the board for approval.
B. Communicate with the chief financial officer and present the revised audit plan to the CEO for approval.
C. Present the revised audit plan directly to the CEO for approval.
D. Communicate with the CEO and present the revised audit plan to the board for approval.
Which of the following statements about including consulting engagements in the annual internal audit plan is true?
A. All requests for consulting engagements must be included in the annual internal audit plan.
B. Assurance engagements must be included in the annual internal audit plan, but there is no requirement to include consulting engagements.
C. Consulting engagements do not need to be included in the annual internal audit plan unless requested by the board.
D. The acceptance of proposed consulting engagements into the annual internal audit plan may depend on their ability to add value.
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