Question 1

Which of the following is most likely to be considered a control weakness?

Options :

A : Vendor invoice payment requests are accompanied by a purchase order and receiving report.

B : Purchase orders are typed by the purchasing department using prenumbered forms

C : Buyers promptly update the official vendor listing as new supplier sources become known.

D : Department managers initiate purchase requests that must be approved by the plant superintendent

Answer: C

Question 2

The internal audit activity is responsible for which of the following actions related to an organization’s internal controls9

Options :

A : Mitigating risks affecting achievement of organizational objectives.

B : Enabling opportunities affecting achievement of organizational objectives.

C : Analyzing and advising regarding costs versus benefits of control activities.

D : Attesting to fairness of financial statements

Answer: C

Question 3

Which of the following situations is most likely to heighten an internal auditors professional skepticism regarding potential fraud?

Options :

A : A procurement manager does not have the expected academic credentials for his position

B : A salesperson frequently complains about the organization-s policy on sales commissions.

C : The accounts payable supervisor has requested advances against her monthly salary on several occasions

D : A financial accountant is absent from work frequently due to regular medical procedures

Answer: A

Question 4

Which of the following best describes why an internal audit activity would consider sending written preliminary observations to the audit client?

Options :

A : Written observations allow for more interpretation.

B : Written observations help the internal auditors express the significance.

C : Written and verbal observations are equally effective.

D : Written observations limit premature agreement

Answer: C

Question 5

An organization's health-care insurance costs have been rising approximately 10 percent per year for several years Which of the following analytical review procedures would best evaluate the reasonableness of the increase in health-care costs?

Options :

A : Develop a comparison of the costs incurred with similar costs incurred by other organizations

B :

Obtain the government index of health-care costs for the comparable period of time and compare the rate of increase with that of the cost per employee incurred by the organization

C :

Obtain a bid from another health-care administrator to provide the same administrative services as the current health-care administrator

D :

Review all claims and compare with appropriate procedures to ensure that overpayments have not occurred

Answer: B