Question 1

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

Question 2

What is expected of internal auditors in regards to due professional care?

Options :

A : Auditors perform assurance services without regard to cost

B : Auditors perform assurance services effectively to identify all risks.

C : Auditors perform assurance services needed to achieve the engagement-s objectives.

D : Auditors perform assurance services to guarantee all significant risks will be addressed.

Answer: C

Question 3

An employee who recently transferred into the internal audit activity has been assigned to audit the accounts payable system. Which function, if previously performed by this employee, would represent a conflict of interest?

Options :

A : Monitoring the allowance for doubtful accounts.

B : Writing procedures for the handling of duplicate payments.

C : Signing timekeeping cards for subordinates.

D : Reviewing shipping documents for accuracy.

Answer: B

Question 4

Which statement most accurately describes how criteria are established for use by internal auditors in determining whether goals and objectives have been accomplished?

Options :

A : Management is responsible for establishing the criteria.

B : Internal auditors should use professional standards or government regulations to establish the criteria.

C : The industry in which a company operates establishes criteria for each member company through benchmarks and best practices for that industry.

D : Appropriate accounting or auditing standards, including international standards, should be used as the criteria.

Answer: A

Question 5

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