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1. Which of the following best explains why internal auditors should identify risk scenarios during a risk assessment of the area being audited?
A) To determine what would prevent the achievement of objectives in the area being audited.
B) To determine whether established controls are operating effectively to mitigate critical risks.
C) To evaluate the adequacy of management's risk management process in the area being audited.
2. If an internal auditor needs to evaluate compliance with an internal control policy, which sampling method is most appropriate?
A) Difference estimation sampling
B) Attribute sampling
C) Probability-proportional-to-size sampling
3. An internal auditor is performing an internal control assessment at a manufacturing company. The auditor observed that the accounts payable clerks have the ability to create new vendors without management's review and approval. How should the auditor document this observation?
A) The observation doesn't affect the adequacy of the internal controls because the existing process controls ensure that invoices are promptly and accurately paid.
B) The observation is an internal control weakness; therefore, additional testing should be performed to determine whether secondary mitigating controls exist or whether the control should be redesigned.
C) The observation is a sign of adequate internal controls; however, effectiveness testing should be performed to ensure that the controls are operating as designed and intended.
4. Which of the following tools would assist with the coordination of efforts between the internal audit team and operational management?
A) Control self-assessment.
B) Automated workpapers.
C) Continuous auditing.
5. Which of the following statements is true regarding engagement status meetings?
A) They mainly involve one-way communication from the internal auditor to management of the area under review.
B) They should involve the chief audit executive and senior management.
C) They are expected to enhance the relationships between the internal audit activity and management of the area under review.
Solutions:
| Question # 1 Answer: A | Question # 2 Answer: B | Question # 3 Answer: B | Question # 4 Answer: A | Question # 5 Answer: C |
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