NO.114 Which of the following is the most common method management can use to manage risk within its risk appetite?

NO.115 If management expects 100 percent compliance with a procedure, which of the following sampling approaches would be most appropriate?

NO.116 What type of analysis is performed when an auditor tests for unusual variations in information by comparing the number of employees working at a factory site with the direct cost of production each month over a period of one year?

NO.117 Due to a recent system upgrade, an audit is planned to test the payroll process. Which of the following audit objectives would be most important to prevent fraud?

NO.118 Which of the following is not a primary purpose for conducting a walk-through during the initial stages of an assurance engagement?

NO.119 Which of the following would be a red flag that indicates the possibility of inventory fraud?
I. The controller has assumed responsibility for approving all payments to certain vendors.
II. The controller has continuously delayed installation of a new accounts payable system, despite a corporate directive to implement it.
III. Sales commissions are not consistent with the organization’s increased levels of sales.
IV. Payments to certain vendors are supported by copies of receiving memos, rather than originals.

NO.120 Information gathered in a forensic investigation of business fraud is usually gathered with which of the following standards in mind?

NO.121 As part of an operational audit, an auditor compared records of current inventory with usage during the prior two-year period and determined that the spare parts inventory was excessive. What step should the auditor perform first?

NO.122 During an operational audit of a chain of pizza delivery stores, an auditor determined that cold pizzas were causing customer dissatisfaction. A review of oven calibration records for the last six months revealed that adjustments were made on over 40 percent of the ovens. Based on this, the auditor:

NO.123 Which of the following best illustrates the primary focus of a risk-based approach to control self-assessment?

NO.124 During an audit of a branch bank, an internal auditor learned that a series of system failures had resulted in a four-day delay in processing customers’ scheduled payroll direct deposits. The first failure was that of a disk drive, followed by software and other minor failures. Which of the following controls should the auditor recommend to avoid similar delays in processing?

NO.125 The chief audit executive of a medium-sized financial institution is evaluating the staffing model of the internal audit activity (IAA). According to IIA guidance, which of the following are the most appropriate strategies to maximize the value of the current IAA resources?
* The annual audit plan should include audits that are consistent with the skills of the IAA.
* Audits of high-risk areas of the organization should be conducted by internal audit staff.
* External resources may be hired to provide subject-matter expertise but should be supervised.
* Auditors should develop their skills by being assigned to complex audits for learning opportunities.

NO.126 The final internal audit report should be distributed to which of the following individuals?

NO.127 A large investment organization hired a chief risk officer (CRO) to be responsible for the organization’s risk management processes. Which of the following people should prioritize risks to be used for the audit plan?

NO.128 An internal auditor and engagement client are deadlocked over the auditor’s differing opinion with management on the adequacy of access controls for a major system. Which of the following strategies would be the most helpful in resolving this dispute?

NO.129 According to IIA guidance, which of the following are benefits to the internal audit activity when conducting an assurance mapping exercise?

NO.130 Which of the following best defines an engagement conclusion?

NO.131 A staff auditor, nearly finished with an audit engagement, discovers that the director of marketing has a gambling habit. The gambling issue is not directly related to the existing engagement and there is pressure to complete the current engagement. The auditor notes the problem and forwards the information to the chief audit executive but performs no further follow-up. The auditor’s actions would:
I. Be in violation of the IIA Code of Ethics for withholding meaningful information.
II. Be in violation of the Standards because the auditor did not properly follow up on a red flag that might indicate the existence of fraud.
III. Not be in violation of either the IIA Code of Ethics or Standards.

NO.132 Which of the following is a responsibility of the internal auditor once a fraud investigation has been concluded?

NO.133 Which of the following statements is correct regarding the assessment of risk in the annual audit planning process?
1.Activities requested by management should be considered higher risk than those requested by the audit committee.
2.Activities with lower budgets can be as high risk as those with higher budgets.
3.The potential financial or adverse exposure should always be considered in the assessment of risk.