NEW QUESTION 1
Which of the following controls could an internal auditor reasonably conclude is effective by observing the physical controls of a large server room?

• A. Adequate signs are in place to assist in locating safety equipment.
• B. Servers are secured individually to their racks by locks.
• C. Foam fire extinguishers are operable to protect against electrical fires.
• D. Swipe card access is required to gain access to the server room.

Answer: A

NEW QUESTION 2
According to IIA guidance, which of the following scenarios demonstrates an internal auditor exercising due professional care?
When auditing investments, the auditor identified instruments with which he was unfamiliar. He decided not to select that type of investment in his sample, as he did not have the knowledge needed to

• A. perform a proper assessment.
• B. An auditor was reviewing inventory counts conducted by the warehouse staf
• C. One truck containing an immaterial amount of inventory was off-site and wasn't verified by the auditor.
• D. An auditor visited a plant that produces a significant portion of the organization's inventor
• E. The day he arrived, the plant manager was out sick, so the auditor issued the report without interviewing the manager.
• F. An auditor in charge needed to have testing completed by the end of the month, but was behind schedul
• G. He identified a junior auditor to conduct the work for him on a complex area of the organization.

Answer: A

NEW QUESTION 3
Which of the following activities should the chief audit executive perform to ensure compliance with an organization's code of conduct?

• A. Act as an adviser to the committee responsible for reviewing violations of the code.
• B. Review and adjudicate all violations of the code of conduct.
• C. Lead the committee responsible for the oversight of the code.
• D. Implement a system of procedures to inform all employees of the code.

Answer: A

NEW QUESTION 4
Which of the following statements accurately describes the responsibility of the internal audit activity regarding IT governance?
* 1. The internal audit activity does not have any responsibility because IT governance is the responsibility of the board and senior management of the organization.
* 2. The internal audit activity must assess whether the IT governance of the organization supports the organization's strategies and objectives.
* 3. The internal audit activity may assess whether the IT governance of the organization supports the organization's strategies and objectives.
* 4. The internal audit activity may accept requests from management to perform advisory services regarding how the IT governance of the organization supports the organization's strategies and objectives.

• A. 1 only.
• B. 4 only.
• C. 2 and 4.
• D. 3 and 4.

Answer: A

NEW QUESTION 5
A manufacturing line supervisor joins the internal audit activity for a two-year rotational job assignment and is assigned to an accounts receivable audit. With regard to this assignment, which of the following should be the primary concern of the audit manager?

• A. Due professional care.
• B. Individual independence.
• C. Individual objectivity.
• D. Organizational independence.

Answer: A

NEW QUESTION 6
Which of the following actions best demonstrates that an internal auditor is exercising due professional care?

• A. The auditor performs thorough reviews and provides absolute assurance of regulatory compliance.
• B. The auditor is alert to the possibility of fraud and activities where irregularities are most likely to occur.
• C. The auditor recommends improvements for all of the organization's procedures and practices.
• D. The auditor is cognizant of reducing travel expenses by combining a personal vacation with a business trip.

Answer: B

NEW QUESTION 7
According to IIA guidance, which of the following must internal auditors consider to conform with the requirements for due professional care during a consulting engagement?
* 1. The cost of the engagement, as it pertains to audit time and expenses in relation to the potential benefits.
* 2. The needs and expectation of clients, including the nature, timing, and communication of engagement results.
* 3. The application of technology-based audit and other data analysis techniques, where appropriate.
* 4. The relative complexity and extent of work needed to achieve the engagement's objectives.

• A. 1, 2, and 3
• B. 1, 2, and 4
• C. 1, 3, and 4
• D. 2, 3, and 4

Answer: B

NEW QUESTION 8
An internal auditor is conducting an assessment of the organization's fraud prevention program using the COSO enterprise risk management framework. According to this framework, which of the following activities would fall under the control environment component for preventing fraud?
* 1. The organization uses an automated authority approval matrix to control payments.
* 2. The organization has a whistleblower hotline that is available to employees.
* 3. Annually, every manager completes a comprehensive fraud assessment of his or her department.
* 4. Annually, the organization reviews and communicates the code of expected behavior.

• A. 1 and 2.
• B. 1 and 3.
• C. 2 and 3.
• D. 2 and 4.

Answer: D

NEW QUESTION 9
Reviewing prior audit reports and supporting workpapers before an engagement starts enables an internal auditor to do which of the following?
* 1. To understand better the activity and processes that will be audited.
* 2. To identify the audit procedures that will be used during the engagement.
* 3. To ensure that matters of greatest vulnerability will be addressed.
* 4. To use the information obtained as evidence in the current engagement.

• A. 4 only
• B. 1 and 3 only
• C. 1 and 4 only
• D. 2, 3, and 4 only

Answer: B

NEW QUESTION 10
An internal auditor is performing analytical reviews as part of an audit of a supermarket's merchandising department. Because the economy has declined since midyear, the auditor can expect to encounter which of the following?

• A. Higher inventory turnover.
• B. Higher operating margin.
• C. Lower obsolete stock disposal.
• D. Lower sales volume.

Answer: D

NEW QUESTION 11
An internal audit team is performing an audit of workplace accident claims.
Which of the following actions by the audit team best demonstrates due professional care?

• A. Having an occupational health officer on the engagement team.
• B. Determining that the claims have been classified properly.
• C. Placing reliance on medical reports from the injured worker's doctor.
• D. Reviewing claims to ensure all accidents actually occurred in the workplace.

Answer: A

NEW QUESTION 12
Which of the following is an example of a risk avoidance strategy?

• A. Hedging against exchange rate variations.
• B. Limiting access to an organization's data center.
• C. Selling a nonstrategic business unit.
• D. Outsourcing a high-risk activity.

Answer: C

NEW QUESTION 13
Which of the following types of fraud includes embezzlement?

• A. Fraudulent statements.
• B. Bribery.
• C. Misappropriation of assets.
• D. Corruption.

Answer: C

NEW QUESTION 14
Non-statistical sampling does not require which of the following?

• A. The sample to be representative of the population.
• B. The sample to be selected haphazardly.
• C. A smaller sample size than if selected using statistical sampling.
• D. Projecting the results to the population.

Answer: C

NEW QUESTION 15
A snow removal company is conducting a scenario planning exercise where participating employees consider the potential impacts of a significant reduction in annua snowfall for the coming winter. Which of the following best describes this type of risk?

• A. Residual.
• B. Net.
• C. Inherent.
• D. Accepted.

Answer: C

NEW QUESTION 16
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