IIA IIA-CIA-Part1 Quiz 51 Topic 1 Questions 251-255

Question: 1

An organization's chief audit executive (CAE) determines that the internal audit staff does not have the requisite skills to conduct an audit of the financial derivatives are

a. Which of the following would be the best course of action for the CAE to follow?

AOutsource the audit engagement to a qualified external auditing firm without burdening the audit committee with the decision.

BDetermine the requisite knowledge needed, and obtain the proper training for auditors, even if the training will significantly push back the project's timeframe as outlined by the audit committee.

CNotify the audit committee of the problem, and assign the most competent auditors on staff to perform the audit engagement.

DEmploy the skills of a financial derivatives expert to consult on the project, and supplement the consulting with a local seminar on financial derivatives.

Show Answer

Question: 2

Management of a publicly-held organization requires the internal audit activity to be involved with quarterly financial statements, which are made public and used internally. Which of the following explanations of management's decision is least plausible?

AManagement may be concerned about its reputation in the financial markets.

BManagement is following best-practice protocol, as stipulated by the Standards, which states that internal auditors must review quarterly financial statements.

CManagement may be concerned about potential penalties that could occur if quarterly financial statements are misstated.

DManagement may perceive that having quarterly financial information examined by the internal auditors enhances the information's value to internal decision making.

Show Answer

Question: 3

Which of the following scenarios exemplifies a potential internal control weakness?

AThe same employee who receives cash from customers prepares a prelisting of cash receipts.

BThe same employee who records cash receipts in the accounts receivable subsidiary ledger ensures that the ledger automatically updates the information.

CThe same employee who restrictively endorses checks received from customers prepares the bank's check deposit slips.

DThe same employee who makes deposits at the bank prepares the monthly bank reconciliation.

Show Answer

Question: 4

After being terminated due to downsizing, an internal auditor finds a different job with an organization in the same industry. Which of the following actions would violate the IIA Code of Ethics?

ATo determine audit priorities in the new job, the auditor uses the audit risk approach that the auditor's previous employer used, without receiving permission to do so.

BAt the new organization, the auditor is asked to develop forms to implement probability-proportional-to-size sampling. Although unsure of how to perform this type of sampling, the auditor proceeds without asking for assistance.

CIn preparing for an audit at the previous organization, the auditor had conducted a great deal of research on the Internet at home to identify best practices for the management of a treasury function. The auditor has retained much of the research and uses it to conduct an audit of the new employer's treasury function.

DIn the first week at the new organization, the auditor discovers a high fraud risk surrounding the organization's database and suggests that the information technology department implement a new password system to prevent fraudulent actions before they occur.

Show Answer

Question: 5

An organization has implemented a new automated payroll system that contains a table of pay rates that are matched to employee job classifications. Which control should an internal auditor suggest in order to ensure that the table is updated correctly, and is used only for valid pay changes?

ARestrict data-table access from management and line supervisors who have the authority to determine pay rates.

BRequire a supervisor in the department, who has the ability to change the table, to compare the changes to a signed management authorization.

CEnsure that adequate edit and reasonableness checks are built into the automated system.

DRequire a manager, who is independent of the system and who cannot change the table, to authorize and sign-off on any employee pay changes.

Show Answer

IIA IIA-CIA-Part1 Quiz:51 Topic:1 Questions:251-255