Question 1

Which of the following statements describes a control failure that is not directly attributable to a customer billing application?

1. End users have raised a number of concerns regarding data integrity.

2. An untested program change is transferred from the test environment to production.

3. Purchase history does not reconcile with accounts receivable for some customers.

4. End user security is inadvertently granted to an unauthorized individual by management.

Options :

A : 1 and 3.

B : 1 and 4.

C : 2 and 3.

D : 2 and 4.

Answer: D

Question 2

A chief audit executive is finding it increasingly difficult to obtain cooperation from some managers who refuse to provide access to records and property when requested. To address this situation, which of the following should be reinforced?

Options :

A : The authority of the internal audit activity.

B : The independence and objectivity of the internal audit activity.

C : The objectives of the quality assurance and improvement program.

D : The responsibilities of the internal audit activity.

Answer: A

Question 3

Which of the following is correct regarding the implementation of a quality assurance and improvement program for the internal audit function?

Options :

A : The board has the primary responsibility for implementation of a robust quality assurance and improvement program for internal audit.

B : An internal audit function that is fully complying with internal assessment of quality can confidently claim it is performing in conformity with the International Professional Practices Framework.

C : The chief audit executive can establish a formal quality assurance and improvement program that is led by an audit manager.

D : A quality assurance and improvement program is applicable depending on the size and complexity of the audit function.

Answer: C

Question 4

An internal auditor for a large retail chain suspects that a store manager has been stealing money from cash sales by listing the sales as accounts receivable and then writing off the accounts as bad debts. Which of the following irregularities is the most likely cause of the auditor's suspicion?

Options :

A : A much higher bad debt expense as a percentage of sales than that of previous years.

B : A much higher bad debt expense as a percentage of sales than that of other stores.

C : A much higher percentage of past-due accounts receivable than that of other stores.

D : A much higher percentage of past-due accounts receivable than that of previous years.

Answer: B

Question 5

Which of the following would be the least significant consideration when performing a risk analysis?

Options :

A : Financial exposure and potential loss.

B : Skills available within the audit staff.

C : Results of prior audits.

D : Major operating changes.

Answer: B