Question 1

According to IIA guidance, which of the following is true when the internal audit activity is asked to investigate potential ethics violations in a foreign subsidiary?

Options :

A :

Communication of any internal ethics violations to external parties may occur with appropriate safeguards.

B : Cultural impacts are less critical where the organization practices uniform polices around the globe.

C : Cross-cultural differences should always be handled by the staff of the same cultural background.

D : Local law enforcement should be involved as they are more familiar with the applicable local laws.

Answer: A

Question 2

Which of the following recommendations made by the internal audit activity (IAA) is most likely to help prevent fraud?

Options :

A :

A review of password policy compliance found that employees frequently use the same password more than once during a year. The IAA recommends that the access control software reject any password used more than once during a 12-month period.

B :

A review of internal service-level agreement compliance in financial services found that requests for information frequently are fulfilled up to two weeks late. The IAA recommends that the financial services unit be eliminated for its ineffectiveness.

C :

A vacation policy compliance review found that employees frequently leave on vacation before their leave applications are signed by their manager. The IAA recommends that the manager attend to the leave applications in a more timely fashion.

D :

A review of customer service-level agreements found that orders to several customers are frequently delivered late. The IAA recommends that the organization extend the expected delivery time advertised on its website.

Answer: A

Question 3

An internal auditor discovered that sales contracts with business clients were not stored in the electronic document management database instead they were scanned and saved in a nonsystematic manner to server folders Which of the following would be an appropriate consequence for the internal auditor to include in the documented observation?

Options :

A :

The document management policy requires business client data to be stored in a specific management database

B :

Sales contracts were stored improperly because the office manager was not trained to use the electronic database and prefers to avoid it

C :

if the organization becomes subject to litigation the agreed pricing terms and conditions of the contracts may be difficult to prove

D :

All staff should be appropriately trained and required to follow the organization-s established policies and procedures pertaining to document management

Answer: C

Question 4

Which of the following best describes external benchmarking using trend analysis for a subsidiary of an international company?

Options :

A :

Comparing the current ratio of the subsidiary with the current ratio of another company for the same period

B :

Comparing common-size financial statements of the subsidiary with the averages of the industry for the last two periods

C : Comparing the sales of the subsidiary with the sales of another subsidiary for the last two periods.

D : Comparing the sales of the subsidiary with the budgeted figures for the last two periods

Answer: B

Question 5

An internal auditor plans to conduct a walk-through to evaluate the control design of a process. Which of the following techniques is the auditor most likely to use?

Options :

A : Observation and inspection.

B : Inquiry and observation.

C : Inspection and reperformance.

D : Inquiry and reperformance.

Answer: B

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