An organization's finance manager plans to implement a state-of-the-art management system to better manage the organization's receivables. The finance manager consulted the chief audit executive (CAE) and asked for her assistance in determining whether the organization is able to accommodate this system. How would the CAE proceed to determine the objectives of this engagement?
A. Ask the CEO to determine the scope and objectives of the engagement.
B. Request that the board disclose its concerns over governance for inclusion in the engagement.
C. Discuss the concerns with the finance manager and work together to agree on the engagement objectives.
D. Review previous audit reports from the area and develop engagement objectives to address the area's key risks and controls.
Which of the following statements regarding the risk management process' support of the internal audit activity is true?
A. The risk management process can provide more extensive internal audit services to the organization if it does not have an internal audit department.
B. The risk management process supports internal audit by evaluating whether critical controls are adequate and effective.
C. The risk management process can determine whether all significant risks have been identified and are being treated.
D. The risk management process establishes an organization-specific, documented risk management framework.
To effectively communicate the acceptance of risk in an organization, a chief audit executive must first consider which of the following?
A. The organization's view on risk tolerance.
B. The organization's principal risk events.
C. The organization's risk response strategies.
D. The organization's major control activities.
After concluding a preliminary assessment, the engagement supervisor prepared a draft work program. According to IIA guidance, which of the following would be tested by this program?
A. The process objectives.
B. The process risks.
C. The process controls.
D. The process scope.
An organization's inventory is stored in multiple warehouses. During an inventory audit, which of the following activities would most benefit from the use of computerized audit tools?
A. Verifying the existence of inventory items in each warehouse.
B. Assigning the tolerable deviation rate to determine the sample size.
C. Valuating the obsolete inventory from all the warehouse locations.
D. Confirming that the purchased items are recorded in the correct period.
Which of the following computerized audit tools or techniques should be used if the internal auditor wants to extract specific files and records in the database?
A. An expert or decision support system.
B. Generalized audit software.
C. A system utility program.
D. An integrated test facility.
An internal auditor wants to assess the completeness of sales invoices issued by the organization over a period of time. Providing that all the necessary data and analytics software is accessible, which of the following types of analysis would be appropriate to satisfy the auditor's objective?
A. Payment terms analysis.
B. Duplicates analysis.
C. Aging analysis.
D. Gap analysis.
Which of the following statements is true regarding internal control questionnaires?
A. Internal control questionnaires are useful in evaluating the effectiveness of standard operating procedures.
B. Internal control questionnaires provide reliable documents allowing internal auditors to cover many control procedures in little time.
C. Internal control questionnaires can be used by internal auditors as an interview guide.
D. Internal control questionnaires provide direct audit evidence, which may need corroboration.
Which of the following is most likely to be judged as a significant residual risk that would exceed the organization's acceptable risk level?
A. Any risk involving organizational expansion into a new geographical area with an unstable political environment.
B. Any risk involving investments into bitcoin and suspicious derivatives.
C. Any risk that can cause material or financial loss.
D. Any risk that could cause injuries or pollute the environment.
Which of the following best describes how an internal auditor would use a flowchart during engagement planning?
A. To prepare for testing the effectiveness of controls.
B. To plan for evaluating potential losses.
C. To prepare a sampling plan for the engagement.
D. To evaluate the design of controls.
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