Question: 1
As a result of an engagement performed at a bank, the internal auditor included the following observation in the final engagement communication:The late charges were waived on an excessive number of delinquent installment loan payments at the Spring Street Branch. We were informed that late charge waivers are not approved by an officer. Approximately US $5,000 per year in revenues are being lost. In order to provide a better control over late charges waived and loss of income, we recommend that a lending officer be responsible for waiving late charges and that this approval be in writing.Which of the following elements of an observation is not properly addressed?
Question: 2
A governmental agency, constrained by scarce internal audit and human resources, wishes to know the status of its program for licensing automobiles. In particular, management is concerned about the possibility of : A backlog in new license applications, and Poor controls over the collection and processing of application fees. The results of the preliminary survey and limited testing conducted by the internal audit activity revealed that the licensing process was operating as intended. No major deficiencies were noted. How should the internal audit activity proceed?
Question: 3
As an internal auditor for a multinational chemical producer, you have been assigned to an engagement at a local plant. This plant is similar in age, siting, and construction to two other plants owned by the same organization that have been recently cited for discharge of hazardous wastes. In addition, you are aware that chemicals manufactured at the plant release toxic by-products. Assume that you have evidence that the plant is discharging hazardous wastes. As a certified internal auditor, what is the appropriate communication requirement in this situation?
Question: 4
Internal audit activity policy requires that final engagement communications not be issued without a management response. An engagement with significant observations is complete except for management's response. Evaluate the following courses of action and select the best alternative.
Question: 5
Engagement field work has identified a number of significant observations. Additional tests from the original engagement work program still have to be performed, but data are not readily available. Evaluate the following and select the best alternative:
