Question 1

A chief audit executive (CAE) for a specialty retailer is asked by management to review the controls in place to manage their electronic funds transfer process.

The internal audit activity has no experience with similar engagements. What is the most appropriate course of action for the CAE to take?

Options :

A : Plan the engagement and begin fieldwork using existing staff.

B : Attempt to discourage management from the request.

C : Hire an outside consulting firm to assist with the engagement.

D : Defer the audit until current staff can be appropriately trained.

Answer: C

Question 2

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

Question 3

Which of the following is not an appropriate control related to sales in a manufacturing company?

Options :

A : Customers' orders are recorded promptly.

B : Goods shipped are matched with valid customer orders.

C : Goods returned are inspected for damage by the sales department and then entered into inventory.

D : Credit department approval is required for credit sales transactions.

Answer: C

Question 4

Which of the following is most likely to function as a directive control?

Options :

A : Security dogs.

B : Alert employees.

C : Insurance claims.

D : Cycle counts

Answer: B

Question 5

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?

Options :

A : The CAE should agree with the audit committee and implement only those standards appropriate to the size of the IAA.

B : The CAE should request the audit committee to review the Standards to identify specifically which are creating the greatest concern.

C : The CAE should seek sufficient funding to increase audit resources to meet the minimum requirements of the Standards.

D : The CAE should explain that conformance with the Standards is essential and not dependent upon the size of the IAA.

Answer: D

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