Question 1

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 2

An organization that outsources much of its internal audit work to an external service provider is planning for an external quality assessment. Which of the following options would accomplish this task and be in conformance with the Standards?

Options :

A : External industry associate that performed a similar review for a supplier of the organization.

B : A team from an independent entity that previously employed the chief audit executive of the organization.

C : A team under the direction of the organization-s chief audit executive with validation by a former manager of the internal audit activity

D : The same external service provider because of its competency and experience with the organization.

Answer: A

Question 3

According to the Standards, which of the following must an internal auditor take into consideration when performing an assurance engagement of treasury operations?

I. The audit committee has requested assurance of the treasury department's compliance with a new policy on the use of financial instruments.

II. Treasury management has not instituted any risk management policies.

III. Due to the recent sale of a division, the amount of cash and marketable securities managed by the treasury department has increased by 350 percent.

IV. The external auditors have indicated some difficulties in obtaining account confirmations

Options :

A : I and II only

B : I and IV only

C : I, II, and III only

D : II, III, and IV only

Answer: C

Question 4

Which of the following would have the least impact (either positive or negative) on an assessment of a department's control environment?

Options :

A : The department managed long-term investments, including investment in derivatives and other financial instruments, to maximize return.

B : The department manager sets a tone of honesty and integrity in all business dealings and this tone is emulated by department personnel.

C : Many department functions were duplicated or verified by other department employees as part of the department-s normal procedures.

D : Audit tests designed to verify compliance with control procedures detected a general failure to follow standard procedures for transaction authorization.

Answer: A

Question 5

Senior management asks the chief audit executive to review the organization's compliance with recently introduced legislation on international transfer pricing. The review requires an internal auditor who thoroughly understands the legislation and pricing methods. The internal audit activity does not have an auditor with those skills. Which of the following is the most appropriate course of action?

Options :

A : Outsource the engagement to an external audit firm that has appropriate skills.

B : Recruit a lawyer with knowledge of the legislation to the audit team and ask the new auditor to perform the engagement.

C : Decline to perform the engagement, as the internal audit activity does not have the appropriate skill set.

D : Carry out the engagement using existing internal audit staff to help them gain the appropriate experience.

Answer: A

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