IIA IIA-CIA-Part1 Quiz 49 Topic 8 Questions 241-245

Question: 1

Which of the following actions indicates a lack of due professional care by an internal auditor performing an audit of a store's cash function?

AThe audit report included a well-supported recommendation for a reduction in staff even though such a reduction might adversely impact morale.

BThe auditor tested samples of transactions to test the cash function's process flows.

CAfter determining that the cash function internal controls were strong, the audit report assured senior management that fraud was not present.

DThe auditor discovered an instance of potential fraud and reported it immediately to management, but did not alert authorities outside the organization.

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Question: 2

During the course of an audit, an internal auditor discovers that a valuable employee in the research department has been patenting new developments in the employee's name that are unrelated to the basic business of the organization.

The organization does not have a policy addressing this specific issue, but does have a general policy that all important new discoveries by employees are the property of the organization.

Division management views the employee's actions as extra incentive to retain the employee.

A decision to include the employee's action in the engagement final communication would be:

1. A violation of the IIA Code of Ethics.

2. A violation of the reporting requirements in the Standards.

3. Justified and necessary, according to the IIA Code of Ethics and Standards.

A1 only

B2 only

C3 only

D1 and 2 only

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Question: 3

A staff auditor, nearly finished with an audit engagement, discovers that the director of marketing has a gambling habit. The gambling issue is not directly related to the existing engagement, and there is pressure to complete the current engagement. The auditor notes the problem and forwards the information to the chief audit executive, but performs no further follow-up.

Which of the following statements is true about the auditor's actions?

AThey are in violation of the IIA Code of Ethics because the auditor withheld meaningful information.

BThey are in violation of the Standards because the auditor did not properly follow up on a red flag that might indicate the existence of fraud.

CThey are in violation of neither the IIA Code of Ethics nor the Standards.

DThey are not in violation of the Standards but are in violation of the IIA Code of Ethics.

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Question: 4

Which of the following scenarios would represent the greatest threat to the authority of the internal audit activity (IAA)?

AA change was implemented requiring the IAA to report administratively to the organization's chief legal counsel rather than the board.

BResponsibility for risk management processes were removed from the IAA and placed under a newly created chief risk officer.

CThe IAA was denied access to expenditure and budget requirement reports because the reports were considered to be financial administrative matters.

DAn internal auditor was informed by the chief financial officer that client survey results would be unfavorable unless the auditor changed a finding in the report.

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Question: 5

Which of the following activities best reflects the scope and status of the internal audit activity as defined in the internal audit policy statement?

AThe internal auditor reviews the physical access to merchandise during an inventory count.

BThe audit manager conducts an internal quality assessment of the internal audit activity's adherence to the Standards.

CThe audit manager refrains from assigning an auditor who was a former payroll clerk to conduct a payroll audit.

DThe board approves the annual performance evaluation of the chief audit executive.

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IIA IIA-CIA-Part1 Quiz:49 Topic:8 Questions:241-245