Question: 1
Which of the following statements is true about visual observation during an audit engagement?
1. Visual observations should not be documented as the facts have not been substantiated.
2. Complex conditions observed should be verified prior to communicating observations to management.
3. Visual observations can be used to detect ineffective controls, idle resources, and safety hazards.
4. Visual observation can be used during both preliminary survey and fieldwork stages of the audit engagement.
Question: 2
An engagement manager is reviewing the results of sampling work performed by staff internal auditors. Which interim report statement should immediately give the engagement manager cause for concern about the nature and quality of the sampling procedure?
A The acceptable risk of assessing control risk too low is 10%, the tolerable deviation rate is 5%, the expected population deviation rate is 1%, sample size is 80 out of a large population.
B The acceptable risk of assessing control risk too low is 5%, the tolerable deviation rate is 5%, the expected population deviation rate is 5%, the sample size is 1580.
C The acceptable risk of assessing control risk too low is 5%, the tolerable deviation rate is 5%, the expected population deviation rate is 1%, the confidence expressed is 95%.
D The acceptable risk of assessing control risk too low is 10%, the tolerable deviation rate is 5%, the true, but unknown population rate is less than 5%, the achieved upper deviation limit is 4.8%.
Answer : B
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Question: 3
Which of the following is considered a common red flag indicator in helping to uncover fraud?
Question: 4
Which of the following, other than the internal audit charter, is most likely to define the purpose, authority, and responsibility of the internal audit activity (IAA)?
Question: 5
According to the IIA Code of Ethics, the deliberate omission of relevant information from an audit report would violate which principle?