Question: 1
Management should be included in the development of the audit plan in order to:
Question: 2
The primary reason that a chief audit executive (CAE) reviews external audit management letters and management response is to:
Question: 3
Which of the following statements is correct regarding corporate compensation systems and related bonuses?
I . A bonus system should be considered part of the control environment of an organization and should be considered in formulating a report on internal control.
II . Compensation systems are not part of an organization's control system and should not be reported as such.
III . An audit of an organization's compensation system should be performed independently of an audit of the control system over other functions that impact corporate bonuses.
Question: 4
Which of the following elements should an auditor recommend for inclusion in an organization's code of ethics?
I . Ethics should vary with local customs in the organization's foreign operations.
II . Whistle-blowing should be discouraged because it can cause distrust among employees and false accusations which waste organizational resources on investigations.
III . Ethical behavior should not be incorporated into performance evaluations because it is too subjective and controversial.
Question: 5
The chief commodity trader for a large energy company learns from a friend that a competitor will likely fail its upcoming regulatory audit and will be forced to temporarily decrease production. If the information is true, the trader has short-term opportunities to make trades that will financially benefit the trader's company and will lead to a substantial increase in the trader's performance bonus. However, if the information is not true, making the trades will significantly increase the company's risk of being caught in a long position. From an ethical perspective, which of the following would be the most appropriate course of action for the trader to take?
