Question 1

When forming an opinion on the adequacy of management's systems of internal control, which of the following findings would provide the most reliable assurance to the chief audit executive?

* During an audit of the hiring process in a law firm, it was discovered that potential employees' credentials were not always confirmed sufficiently. This process remained unchanged at the following audit.

* During an audit of the accounts payable department, auditors calculated that two percent of accounts were paid past due. This condition persisted at a follow up audit.

* During an audit of the vehicle fleet of a rental agency, it was determined that at any given time, eight percent of the vehicles were not operational. During the next audit, this figure had increased.

* During an audit of the cash handling process in a casino, internal audit discovered control deficiencies in the transfer process between the slot machines and the cash counting are

a. It was corrected immediately.

Options :

A : 1 and 3 only

B : 1 and 4 only

C : 2 and 3 only

D : 2 and 4 only

Answer: B

Question 2

Which of the following responsibilities would fall under the role of the chief audit executive, rather than internal audit staff or the audit manager?

Options :

A : Manage and support a quality assurance and improvement program.

B : Maintain industry-specific knowledge appropriate to the audit engagements

C : Set clear performance standards for internal auditors and the internal audit activity.

D : Apply problem-solving techniques for routine situations.

Answer: C

Question 3

Which of the following statements is true regarding reversing entries in an accounting cycled

Options :

A : Reversing all previous closing adjustments is a mandatory step in the accounting cycle

B : Reversing entries should be completed at the end of the next accounting period after recording regular transactions of the period

C : Reversing entries are identical to the adjusting entries made in the previous period.

D : Reversing entries are the exact opposite of the adjustments made in the previous period.

Answer: D

Question 4

Which of the following factors would reduce dissatisfaction for a management trainee but would not particularly motivate the trainee?

Options :

A : A sense of achievement.

B : Promotion.

C : Recognition.

D : An incremental increase in salary.

Answer: D

Question 5

An assurance mapping exercise helps an organization do which of the following?

1. Provide assurance to stakeholders that risks are managed and reported, and regulatory and legal obligations are met.

2. Fulfill best practices in the industry.

3. Identify and address any gaps in the risk management process.

4. Identify fraud.

Options :

A : 1 and 4.

B : 1 and 3.

C : 2 and 3.

D : 3 and 4.

Answer: B

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