Upon joining the internal audit activity, each new auditor receives a copy of the audit handbook.
Which of the following handbook policies has the greatest risk of compromising audit objectivity?
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Correct Answer:
B
Q: 2
Which of the following activities should the chief audit executive perform to ensure compliance with
an organization's code of conduct?
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Correct Answer:
A
Q: 3
Which of the following statements describes impairment to the internal auditor's objectivity?
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Correct Answer:
D
Q: 4
Which of the following enhances the independence of the internal audit activity?
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Correct Answer:
C
Q: 5
Which of the following control techniques would minimize the risk of interception during
transmission in an electronic data interchange system?
1. Encryption.
2. Traffic padding.
3. Edit checks.
4. Structured data format.
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Correct Answer:
A
Q: 6
An internal auditor is reviewing the accounts receivable when she discovers account balances more
than three years old. The auditor was previously supervising the area during this time, and she
subsequently advises the chief audit executive (CAE) of a potential conflict.
Which of the following is the most appropriate course of action for the CAE to take?
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Correct Answer:
A
Q: 7
An internal auditor is trying to assess control risk and the effectiveness of an organization's internal
controls. Which of the following audit procedures would not provide assurance to the auditor on this
matter?
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Correct Answer:
C
Q: 8
An internal audit charter should do which of the following?
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Correct Answer:
B
Q: 9
Which of the following statements is true regarding assurance services provided to clients outside of
the organization?
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Correct Answer:
C
Q: 10
When auditing an application change control process, which of the following procedures should be
included in the scope of the audit?
1. Ensure system change requests are formally initiated, documented, and approved.
2. Ensure processes are in place to prevent emergency changes from taking place.
3. Ensure changes are adequately tested before being placed into the production environment.
4. Evaluate whether the procedures for program change management are adequate.
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Correct Answer:
D
Q: 11
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?
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Correct Answer:
A
Q: 12
The chief audit executive (CAE) of a small internal audit activity (IAA) performs all high-risk
engagements on the annual audit plan to make use of his knowledge and experience and to
maximize the efficient use of audit resources. Which of the following statements is most relevant
regarding this practice?
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Correct Answer:
B
Q: 13
A new director was hired to lead the internal audit activity at a small start-up company. Which of the
following assignments would impair the director's independence?
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Correct Answer:
A
Q: 14
Where complex problems need to be addressed, which of the following communication networks
would be most appropriate?
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Correct Answer:
B
Q: 15
According to the ISO 14001 standard, which of the following is not included in the requirements for a
quality management system?
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Correct Answer:
B
Q: 16
Which of the following application software features is the least effective control to protect
passwords?
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Correct Answer:
C
Q: 17
The internal audit activity completed an initial risk analysis of the organization's data storage center
and found several areas of concern. Which of the following is the most appropriate next step?
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Correct Answer:
D
Q: 18
Which of the following is not a method for implementing a new application system?
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Correct Answer:
D
Q: 19
Which of the following control methods is effective in reducing the risk of purchasing-scheme fraud?
1. Periodically reviewing the vendor list for unusual vendors and addresses.
2. Segregating duties for amount purchasing, receiving, shipping, and accounting.
3. Validating sequential integrity of purchase orders.
4. Verifying the validity of invoices with post office box addresses.
Options
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Correct Answer:
B
Q: 20
A small furniture-manufacturing firm with 100 employees is located in a two-story building and does
not plan to expand. The furniture manufactured is not special-ordered or custom-made. The most
likely structure for this organization would be:
