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Which of the following statements would typically be included in the responsibility section of the internal audit charter?

A.
The internal audit activity will have free and unrestricted access to the chief executive officer, audit committee, and chairman of the board of directors.
A.
The internal audit activity will have free and unrestricted access to the chief executive officer, audit committee, and chairman of the board of directors.
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B.
The internal audit activity shall develop a flexible audit plan, based on a risk assessment conducted at least annually and taking into consideration the risks or control concerns identified by management, and shall submit the plan to the board for approval.
B.
The internal audit activity shall develop a flexible audit plan, based on a risk assessment conducted at least annually and taking into consideration the risks or control concerns identified by management, and shall submit the plan to the board for approval.
Answers
C.
The chief audit executive shall obtain the necessary assistance of personnel in areas where audits are performed, as well as specialized services within or outside of the organization.
C.
The chief audit executive shall obtain the necessary assistance of personnel in areas where audits are performed, as well as specialized services within or outside of the organization.
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D.
The internal audit activity will not implement controls, develop procedures, install systems, prepare records, or engage in activities that may impair internal auditors' judgments.
D.
The internal audit activity will not implement controls, develop procedures, install systems, prepare records, or engage in activities that may impair internal auditors' judgments.
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Suggested answer: B

Which of the following tools would be most useful to an internal auditor performing an assessment of the effectiveness of the organization's risk responses?

A.
Heat map.
A.
Heat map.
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B.
Risk and control matrix.
B.
Risk and control matrix.
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C.
Risk register.
C.
Risk register.
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D.
Process map.
D.
Process map.
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Suggested answer: C

According to IIA guidance, which of the following is necessary for internal auditors to comply with the requirements for proficiency?

A.
Sufficient consideration of current activities, trends, and emerging issues to effectively carry out their professional responsibilities.
A.
Sufficient consideration of current activities, trends, and emerging issues to effectively carry out their professional responsibilities.
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B.
Ability to provide relevant advice and recommendations to management and the board.
B.
Ability to provide relevant advice and recommendations to management and the board.
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C.
Understanding of key IT risks and controls and the ability to identify fraud using technology-based audit techniques.
C.
Understanding of key IT risks and controls and the ability to identify fraud using technology-based audit techniques.
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D.
Knowledge, skills, and other competencies necessary to perform individual responsibilities during the engagement.
D.
Knowledge, skills, and other competencies necessary to perform individual responsibilities during the engagement.
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E.
1 and 4 only.
E.
1 and 4 only.
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F.
1, 2, and 3 only.
F.
1, 2, and 3 only.
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G.
1, 2, and 4 only.
G.
1, 2, and 4 only.
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H.
2, 3. and 4 only
H.
2, 3. and 4 only
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Suggested answer: B

Management is installing security cameras to identify unauthorized physical access to the organization's warehouse. This is an example of which of the following types of controls?

A.
Detective controls.
A.
Detective controls.
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B.
Key controls.
B.
Key controls.
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C.
Primary controls.
C.
Primary controls.
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D.
Preventive controls
D.
Preventive controls
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Suggested answer: A

Which of the following scenarios best demonstrates the application of internal audit proficiency?

A.
Management requests that the internal audit activity review and provide feedback on its strategic plans for a merger, but the chief audit executive (CAE) declines the engagement due to the team's lack of experience with mergers.
A.
Management requests that the internal audit activity review and provide feedback on its strategic plans for a merger, but the chief audit executive (CAE) declines the engagement due to the team's lack of experience with mergers.
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B.
A CAE reassigns auditors from other audits to perform testing on all of the fixed asset additions for a period, including amounts below the materiality level stated by external auditors.
B.
A CAE reassigns auditors from other audits to perform testing on all of the fixed asset additions for a period, including amounts below the materiality level stated by external auditors.
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C.
Due to the routine and recurring nature of bank branch audits, an audit manager often excludes detailed planning at the beginning of the audit and immediately performs fieldwork.
C.
Due to the routine and recurring nature of bank branch audits, an audit manager often excludes detailed planning at the beginning of the audit and immediately performs fieldwork.
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D.
During fieldwork, an auditor observed a lack of segregation of duties over cash management. The auditor reported this observation to his supervisor, who decided that the area should be examined in a subsequent audit.
D.
During fieldwork, an auditor observed a lack of segregation of duties over cash management. The auditor reported this observation to his supervisor, who decided that the area should be examined in a subsequent audit.
Answers
Suggested answer: A

According to IIA guidance, which of the following should be formally documented in the internal audit charter?

A.
The internal audit activity's responsibility for imposing risk management processes.
A.
The internal audit activity's responsibility for imposing risk management processes.
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B.
The internal audit activity's responsibility for the organization's governance framework.
B.
The internal audit activity's responsibility for the organization's governance framework.
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C.
The nature of consulting services provided by the internal audit activity.
C.
The nature of consulting services provided by the internal audit activity.
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D.
The budgeting process for the internal audit activity.
D.
The budgeting process for the internal audit activity.
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Suggested answer: C

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

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

An accounts payable clerk who has access to the vendor master file replaced the payment details of a legitimate vendor with those of a friend before processing the payment through the organization's cashier. Immediately afterward, he restored the original vendor information. Which of the following controls could have prevented this fraud?

A.
Approval of master file change requests by the accounts payable supervisor
A.
Approval of master file change requests by the accounts payable supervisor
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B.
Comparison of the check register to original invoices.
B.
Comparison of the check register to original invoices.
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C.
Segregation of duties between accounts payable and the cashier.
C.
Segregation of duties between accounts payable and the cashier.
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D.
Frequent issuance of account statements sent to the vendors.
D.
Frequent issuance of account statements sent to the vendors.
Answers
Suggested answer: A

The internal auditor obtained large volumes of transaction history data for accounts on which he suspected that some fraudulent transactions occurred. Which of the following actions best demonstrates due professional care by the internal auditor?

A.
The internal auditor carefully scrutinized the data by manually reviewing each transaction to ensure that all irregularities were identified.
A.
The internal auditor carefully scrutinized the data by manually reviewing each transaction to ensure that all irregularities were identified.
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B.
The internal auditor employed the use of data analytics tools to sort, analyze, and detect anomalies in the data
B.
The internal auditor employed the use of data analytics tools to sort, analyze, and detect anomalies in the data
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C.
The internal auditor started the data analysis process by selecting a random sample of transactions on which to perform further tests.
C.
The internal auditor started the data analysis process by selecting a random sample of transactions on which to perform further tests.
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D.
The internal auditor requested that the branch supervisor assist in identifying fraudulent transactions, as he was most familiar with the accounts being audited.
D.
The internal auditor requested that the branch supervisor assist in identifying fraudulent transactions, as he was most familiar with the accounts being audited.
Answers
Suggested answer: B

Who is responsible for setting the risk appetite?

A.
External auditors.
A.
External auditors.
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B.
Chief risk officer.
B.
Chief risk officer.
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C.
Operations management.
C.
Operations management.
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D.
Board of directors.
D.
Board of directors.
Answers
Suggested answer: D
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