A new internal audit activity is creating its first charter. According to IIA guidance, which of the following objectives would be appropriate for inclusion in the charter?
A. Continuously monitor the organization's overall risk activities in relation to its risk appetite.
B. Evaluate the adequacy and effectiveness of the organization's governance activities.
C. Oversee the establishment and administration of an effective risk management program.
D. Assist management in implementing recommended control improvements.
According to the International Professional Practices Framework, which of the following are allowable activities for an internal auditor?
1.
Advocating the establishment of a risk management function.
2.
Identifying and evaluating significant risk exposures during audit engagements.
3.
Developing a risk response for the organization if there is no chief risk officer.
4.
Benchmarking risk management activities with other organizations.
5.
Documenting risk mitigation strategies and techniques.
A. 4 and 5 only.
B. 1.2, and 3 only.
C. 1.2. 4. and 5 only.
D. 2. 3. 4. and 5 only.
Which of the following actions should the audit committee take to promote organizational independence for the internal audit activity?
A. Delegate final approval of the risk-based internal audit plan to the chief audit executive (CAE).
B. Approve the annual budget and resource plan for the internal audit activity.
C. Assist the CAE with hiring objective and competent internal audit staff.
D. Encourage the CAE to communicate and coordinate with the external auditor.
According to IIA guidance, which of the following statements is true regarding periodic internal assessments of the internal audit activity?
A. Internal assessments are conducted to benchmark the internal audit activity's performance against industry best practices.
B. Internal assessments must be performed at least once every five years by a qualified assessor.
C. An internal auditor may perform a peer review of a colleague's workpapers, as long as the auditor wasn't involved in the audit under review.
D. Follow-up to ensure appropriate improvements are implemented is a recommended, but not mandatory, element of internal assessments.
Forty-five percent of an organization's customer payments are submitted online. Eight percent of online payments are rejected. Executive management decides to outsource its online payment services to a contractor that will assume 75 percent of the total value of rejected payments. The organization estimates $1.25 million customer payments due during the contract period.
Which of the following represents the organization's residual risk for online customer payments due?
A. $11, 250
B. $25, 000
C. $33, 750
D. $45, 000
According to IIA guidance, which of the following statements is true regarding the reporting of results from an external quality assessment of the internal audit activity?
A. The external assessment results are reported upon completion in confidence directly to the board, and senior management is advised only of the recommendations and improvement action plans.
B. The results of self-assessments with independent external validation are shared with the board upon completion, and monitoring of recommended improvements must be reported monthly.
C. The external assessment results are communicated upon completion to senior management and the board, but action plans for recommended improvements do not have to be reported.
D. The requirements for reporting quality assessment results are the same for external assessments and self-assessments with independent external validation.
An organization has implemented a software system that requires a supervisor to approve transactions that would cause treasury dealers to exceed their authorized limit. This is an example of which of the following types of controls?
A. Preventive controls.
B. Detective controls.
C. Soft controls.
D. Directive controls.
What is the additional advantage of facilitated workshops, in comparison with structured interviews, used when testing the effectiveness of entity-level controls?
A. During facilitated workshops, people more openly say things to internal auditors than during private interviews.
B. Internal auditors do not need other sources of information, as the data gathered during facilitated workshops is sufficient.
C. Facilitated workshops create a synergy of discussion that can bring multiple perspectives to the same issue.
D. The testimonial evidence obtained during facilitated workshops is generally considered more reliable.
Which of the following is most likely to function as a directive control?
A. Security dogs.
B. Alert employees.
C. Insurance claims.
D. Cycle counts.
Which of the following would be the most appropriate first step for the board to take when developing an effective system of governance?
A. Determine the organization's overall risk appetite.
B. Establish a governance committee.
C. Delegate authority to members of senior management.
D. Identify key stakeholders and their expectations.
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