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The chief audit executive (CAE) has been asked to manage the regulatory compliance function for the organization's retail store operations. Store operations are included in the annual audit plan.
Which of the following strategies best fulfills the requirements of the Standards regarding these audits?
The director of purchasing, a certified internal auditor (CIA), signs a contract to procure a large order from a supplier whose products provide the best price, quality, and performance. A few days after signing the contract, the supplier presents the CIA with $1, 000 as a gift. Which statement regarding acceptance of the money is correct?
A candidate has applied for an entry level internal audit position. The candidate holds a CISA (Certified Information Systems Auditor) designation, and has six months of audit experience, but limited knowledge of accounting principles and techniques. According to the IIA guidance, which of the following is the most relevant reason for the chief audit executive to consider this candidate?
Which of the following is not a role of the internal audit activity in facilitating risk identification and evaluation?
Which of the following statements describes a control failure that is not directly attributable to a customer billing application?
1. End users have raised a number of concerns regarding data integrity.
2. An untested program change is transferred from the test environment to production.
3. Purchase history does not reconcile with accounts receivable for some customers.
4. End user security is inadvertently granted to an unauthorized individual by management.
Which of the following enhances the independence of the internal audit activity?
A manufacturing organization discovers that the waste water released has failed to meet permitted limits.
Which control function will be least effective in correcting the issue?
Which of the following scenarios best illustrates the principle of due professional care?
An organization's chief audit executive (CAE) determines that the internal audit staff does not have the requisite skills to conduct an audit of the financial derivatives area. Which of the following would be the best course of action for the CAE to follow?
During an account receivables audit, an internal auditor found a significant number of input errors resulting in a $500, 000 balance understatement.
Which of the following is the most important question the internal auditor should ask to develop an appropriate recommendation for this finding?
While reviewing first quarter sales transactions, an internal auditor discovered that 10 invoices for a new customer had not been posted into the accounts receivable subsidiary ledger. Those 10 invoices were listed in an error report automatically generated by the sales processing system. The system had rejected the invoices because the customer's account number was not found in the customer master file. In this scenario, which of the following controls was lacking?
A fraud investigation was completed by management, and a proven fraud was communicated to relevant authorities. According to MA guidance, which of the following roles would be most appropriate for the internal audit activity to undertake after the investigation?
Which of the following statements is true regarding assurance services provided to clients outside of the organization?
Which two of the following are preventive controls in a check disbursement process?
1. Daily reconciliation of the bank account used for check disbursements and prompt follow-up of un-reconciled items.
2. Segregation of the following duties: establishing new vendors, approving checks, and reconciling the bank account.
3. An activity report detailing who accesses the check disbursement system and the nature of any action taken in the system.
4. Evidence of strong access controls ensuring that authorized individuals have access only to the functions related to their responsibilities.
According to IIA guidance, which of the following is the best example of a system application control?
If an engagement client disputes that a specific action or process is within the scope of the internal audit activity, what would be the most appropriate way for the internal audit activity (IAA) to respond?
Which of the following are components of the COSO enterprise risk management framework?
1. Objective setting.
2. External environment.
3. Data collection.
4. Control activities.
The chief audit executive (CAE) of a mid-sized pharmaceutical organization has operational responsibility for the regulatory compliance function. The audit committee requests an assessment of regulatory compliance. According to IIA guidance, which of the following is the CAE's best course of action?
Which of the following does not need to be defined in the internal audit charter?
Which of the following risk management activities is most appropriate for an internal auditor to undertake?
According to IIA guidance, which of the following is an area in which the internal auditor should be proficient?
What type of risk management strategy is being employed when an organization installs two firewalls to provide protection from unauthorized access to the network?
A chief audit executive (CAE) of an international charity reports functionally to the audit committee of the board of directors and administratively to the charity's chief financial officer (CFO).
Which of the following would impair the internal audit function's independence?
Which of the following scenarios exemplifies a potential internal control weakness?
An internal auditor is performing analytical reviews as part of an audit of a supermarket's merchandising department. Because the economy has declined since midyear, the auditor can expect to encounter which of the following?
According to the COSO enterprise risk management framework, which of the following best describes the activity that helps ensure risk responses are carried out effectively?
An internal audit activity (IAA) provided assurance services for an activity it was responsible for during the preceding year.
As a result, which IIA Code of Ethics principle is presumed to be impaired?
During an engagement, an internal auditor decided to use variance analysis as an auditing techniques. Which of the following steps should the auditor pursue if he discovers unexpected deviations of actual results from budget?
The audit committee is concerned that the small size of the internal audit activity (IAA) makes it impractical to achieve full conformance with the Standards. To address this concern, which of the following actions is most appropriate for the CAE to take?
This chief audit executive (CAE) engaged an internal auditor to consult on an organization's complex information technology system. Shortly after beginning the engagement, the auditor unexpectedly resigned. Unfortunately, this auditor was the only available auditor with the necessary expertise. The CAE will not be able to hire someone with similar expertise in time to meet a regulatory deadline.
Which of the following would be the best course of action for the CAE to take?
According to the Standards, for how long should internal auditors who have previously performed or had management responsibility for an operation wait to become involved in future internal audit activity with that same operation?
Which of the following statements accurately describes an internal auditor's responsibility with regard to due professional care?
Why is it important for the chief audit executive to periodically review the audit charter and present the results to senior management and the board?
Which of the following is not an appropriate activity for internal auditors to perform?
Which type of objectives can best be described as broad goals that promote the effective and efficient use of resources?
While attending a conference, an internal auditor won an all-expense paid trip sponsored by a vendor of the internal auditor's organization.
Which of the following actions are most appropriate for the auditor to take?
An internal auditor is conducting an engagement in the accounts payable department, which includes expressing an opinion at the micro level. According to IIA guidance, which of the following statements is true regarding micro-level opinions?
1. They are most effective when using a combination of current and prior engagement findings to draw conclusions.
2. They typically are based on defined procedures such as those found in an accounts payable reconciliation process.
3. They are discrete and not normally shared with senior management or the board.
4. They can rely on evidence taken from the work of other assurance activities across the organization.
Which of the following factors have the greatest influence on the independence of the internal audit activity?
According to COSO, which of the following is not considered one of the components of an organization's internal environment?
The security department uncovered what appears to be a complex fraud in the accounting department. The CEO has requested the internal audit activity to investigate the fraud. If the internal audit staff lacks the expertise to conduct the investigation, how should the chief audit executive proceed?
Which of the following documents is most appropriate in promoting the objectivity of the internal audit activity?
In which of the following scenarios would the chief audit executive (CAE) be required to decline the assignment?
According to the COSO internal control framework, which of the following best describes the use of continuous auditing programs by the internal audit activity?
According to IIA guidance, the results of a formal quality assessment should be reported to which of the following groups?
According to IIA guidance, which of the following must the internal auditor consider to meet the requirements for due professional care?
According to IIA guidance, which of the following best describes internal auditors' responsibility regarding fraud?
What should the internal auditor's role be in assessing the organization's ethical climate?
While preparing for an audit of senior management expenses, the chief audit executive (CAE) learns that management is unable to locate a number of original expense claims to support the related disbursements. She decides to defer the engagement until they can be located. Which of the following principles likely guided the CAE's decision?
A new internal audit activity is creating its first charter. According to IIA guidance, which of the following objectives would be appropriate for inclusion in the charter?
Reviewing prior audit reports and supporting workpapers before an engagement starts enables an internal auditor to do which of the following?
1. To understand better the activity and processes that will be audited.
2. To identify the audit procedures that will be used during the engagement.
3. To ensure that matters of greatest vulnerability will be addressed.
4. To use the information obtained as evidence in the current engagement.
Which of the following types of social responsibilities is voluntary and guided purely by the organization's desire to make social contributions?
Which of the following is an activity that an internal auditor must not perform?
While performing an accounts payable engagement, a senior auditor wants to conduct several tests of controls for travel expenses. Which of the following actions are most appropriate for the senior auditor to undertake?
1. Ensure all tests use a random sampling technique.
2. Consider a judgmental approach for the sample size.
3. Assess testing errors through root cause analysis.
4. Ensure that the entire data set is tested.
With regard To IT governance, which of the following is the most effective and appropriate role for the internal audit activity?
Forty-five percent of an organization's customer payments are submitted online. Eight percent of online payments are rejected. Executive management decides to outsource its online payment services to a contractor that will assume 75 percent of the total value of rejected payments. The organization estimates $1.25 million customer payments due during the contract period.
Which of the following represents the organization's residual risk for online customer payments due?
An internal audit team is performing an audit of workplace accident claims.
Which of the following actions by the audit team best demonstrates due professional care?
Which of the following actions should the audit committee take to promote organizational independence for the internal audit activity?
Which of the following combinations of conditions is most likely a red flag for fraud?
Which of the following would be the most important consideration by the internal audit activity when selecting employees to perform an internal quality assessment?
The chief audit executive (CAE) has assigned an internal auditor to an upcoming engagement. Which of the following requirements would most likely indicate that the internal auditor was assigned to an assurance engagement?
Which of the following is not a standard technique that the chief audit executive (CAE) would use to provide evidence of supervisory review of working papers?
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.
Which of the following techniques would best assist an internal auditor in evaluating the efficiency of a wholesale grocery distributor`s process to fill and package orders for shipping?
While reviewing the workpapers of a new auditor, the auditor in charge discovered that additional audit procedures might be necessary. According to IIA guidance, which of the following would be most relevant for the auditor in charge to consider when making this decision?
According to the IIA guidance, who is responsible for periodically assessing the internal audit activity?
An organization has implemented a new automated payroll system that contains a table of pay rates that are matched to employee job classifications. Which control should an internal auditor suggest in order to ensure that the table is updated correctly, and is used only for valid pay changes?
Which of the following is the most effective strategy to manage the risk of foreign exchange losses due to sales to foreign customers?
An accounts receivable clerk receives cash payments, posts the payments to customer accounts, and prepares the daily cash deposit.
The clerk has been stealing some cash and manipulating the customer payments to hide the theft.
This fraud could be detected with which of the following controls?
When developing the organization's first risk universe, which of the following would the chief audit executive be least likely to consider?
Which of the following is true regarding the use of a formal risk management framework?
1. It facilitates a methodical approach to risk mitigation.
2. It defines and standardizes the terminology used in risk communication.
3. It establishes the risk tolerance levels to be accommodated in the strategy.
4. It facilitates the alignment of risk mitigation strategies with management priorities.
Which of the following controls could an internal auditor reasonably conclude is effective by observing the physical controls of a large server room?
Which of the following activities should the chief audit executive perform to ensure compliance with an organization's code of conduct?
Management is developing and implementing a risk and control framework for use throughout the organization. Which of the following elements should be included in the organization's control framework?
1. Appropriate levels of authority and responsibility.
2. Supervision of staff and appropriate review of work.
3. The seniority of management in the organization.
4. The ability to trace each transaction to an accountable and responsible individual.
TESTED 01 May 2026