Question 1

Why is the concept of residual risk important?

Options :

A : Because residual risk is difficult to measure.

B : Because residual risk is all of the risk that remains after controls are established.

C : Because the cost-benefit analysis supporting control design is part of the measure of residual risk.

D : Because the risk that remains after control design and implementation needs to be acceptable to senior management.

Answer: D

Question 2

Which of the following is not true with regard to the internal audit charter?

Options :

A : It defines the authorities and responsibilities of the internal audit activity.

B : It specifies the minimum resources needed for the internal audit activity.

C : It provides a basis for evaluating the internal audit activity.

D : It should be approved by senior management and the board.

Answer: B

Question 3

An internal auditor makes a series of observations when performing an analytical review of division operations. The auditor notes the following things: the current ratio is increasing and the quick ratio is decreasing, sales and current liabilities have remained constant, and the number of day sales in inventory is increasing.Which conclusion should the auditor draw from this data?

Options :

A : Cash or accounts receivable has decreased.

B : The gross margin has decreased.

C : The division produced fewer items this year than in prior years.

D : The gross margin has increased.

Answer: A

Question 4

Which of the following is the best way for an internal auditor to demonstrate due professional care?

Options :

A : Conduct an audit to the same extent that another prudent auditor would under similar circumstances.

B : Seek feedback from the engagement supervisor during the engagement.

C : Request and receive client feedback surveys during the engagement.

Answer: A

Question 5

Topic 6 - Volume F

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?

Options :

A : Having an occupational health officer on the engagement team.

B : Determining that the claims have been classified properly.

C : Placing reliance on medical reports from the injured worker-s doctor.

D : Reviewing claims to ensure all accidents actually occurred in the workplace.

Answer: A

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