IIA IIA-CIA-Part1 Quiz 90 Topic 4 Questions 446-450

Question: 1

Which of the following is least likely to enhance the independence of an internal audit activity?

AThe existence of a formal written charter for the internal audit activity.

BSubmission of an annual internal audit work plan to the audit committee.

CA direct reporting relationship to the audit committee.

DAdherence to the organization's position classification structure.

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Question: 2

Which of the following reporting relationships results in the greatest impairment to the independence of the chief audit executive (CAE)?

AThe CAE reports administratively and functionally to the president.

BThe CAE reports administratively to the president and functionally to the board.

CThe CAE reports administratively to the chief financial officer and functionally to the president.

DThe CAE reports administratively to the audit committee and functionally to the chief operating officer.

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Question: 3

An employee who recently transferred into the internal audit activity has been assigned to audit the accounts payable system. Which function, if previously performed by this employee, would represent a conflict of interest?

AMonitoring the allowance for doubtful accounts.

BWriting procedures for the handling of duplicate payments.

CSigning timekeeping cards for subordinates.

DReviewing shipping documents for accuracy.

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Question: 4

A company's chief audit executive 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 actions would be the least acceptable?

ANotify the audit committee of the problem and consult with them regarding outsourcing the audit engagement to a qualified external auditing firm.

BDetermine the requisite knowledge needed and obtain the proper training for auditors if such training is available within the appropriate time framework outlined by the audit committee.

CNotify the audit committee of the problem and assign the most competent auditors 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.

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Question: 5

During an audit engagement in an insurance company, an internal auditor discovered that senior management had purposely misclassified $200, 000 in assets on financial statements submitted to regulatory authorities in order to avoid significant statutory penalties. To remain in compliance with the IIA Code of Ethics, what would be the most appropriate action for the auditor to take?

ANote the situation in the workpapers and inform the chief executive officer.

BSend an informative memo to the external auditors.

CDiscuss the matter with audit management and ensure that the audit committee is informed.

DReport the matter to regulatory authorities since senior management is implicated.

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IIA IIA-CIA-Part1 Quiz:90 Topic:4 Questions:446-450