Question 1

Which of the following actions should the audit committee take to promote organizational independence for the internal audit activity?

Options :

A : Delegate final approval of the risk-based internal audit plan to the chief audit executive (CAE).

B : Approve the annual budget and resource plan for the internal audit activity.

C : Assist the CAE with hiring objective and competent internal audit staff.

D : Encourage the CAE to communicate and coordinate with the external auditor.

Answer: A

Question 2

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 3

Which of the following scenarios best illustrates a rationalization as the root cause of potential fraud?

Options :

A : Managers who have been with the organization for several decades become aware that newly hired, younger managers are being moved more quickly into senior positions.

B : The controller at a nationwide manufacturing company recently opted to no longer require two-week mandatory vacations for accounting staff.

C : Security cameras that monitor cash handling at the register are not functioning.

D : The organization is slowly phasing out three mature products that produce the highest commissions for the sales staff.

Answer: B

Question 4

Which of the following is the first step an internal audit activity should undertake when executing a data analytics process'?

Options :

A : Conduct a risk assessment regarding the effectiveness of the data analytics process.

B : Analyze possible and available sources of raw data

C : Define the purpose and the anticipated value

D : Select data for cleaning and normalization procedures.

Answer: B

Question 5

Which of the following is an example of a risk avoidance strategy?

Options :

A : Hedging against exchange rate variations.

B : Limiting access to an organization-s data center.

C : Selling a nonstrategic business unit.

D : Outsourcing a high-risk activity.

Answer: C

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