Question 1

An internal auditor is reviewing tender documents for a maintenance contract. She notices that the bidder who won a recent tender has been winning tenders for the past decade despite many other qualified and well-established maintenance companies participating in the tender bids. The price offers from this bidder are consistently slightly lower than other bidders' prices, and this bidder always submits their bid just before the deadline. How should the auditor respond to these findings?

Options :

A : Seize the laptops of employees related to the tender to secure a chain of custody

B : Carry out a forensic examination of tender documents and submitted offers to identify signs of falsification.

C : Conduct a guilt-admission interview with the procurement specialist who has most likely leaked prices of other bidders.

D : Consult the organizational fraud response plan and notify her supervisor of the potential red flags.

Answer: D

Question 2

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 3

The chief audit executive (CAE) has been asked to manage the regulatory compliance function for the organization's retail store operations. Store operations are included in the annual audit plan.

Which of the following strategies best fulfills the requirements of the Standards regarding these audits?

Options :

A : The scope of store operations audits should exclude compliance.

B : Store operations audits can be fully executed with appropriate disclosure to the board.

C : Store operations audits should be performed by an external service provider.

D : A store operations compliance audit should be performed by a staff internal auditor under the direction of the CAE.

Answer: C

Question 4

Which of the following would have the least impact (either positive or negative) on an assessment of a department's control environment?

Options :

A : The department managed long-term investments, including investment in derivatives and other financial instruments, to maximize return.

B : The department manager sets a tone of honesty and integrity in all business dealings and this tone is emulated by department personnel.

C : Many department functions were duplicated or verified by other department employees as part of the department-s normal procedures.

D : Audit tests designed to verify compliance with control procedures detected a general failure to follow standard procedures for transaction authorization.

Answer: A

Question 5

A receiving department receives copies of purchase orders for use in identifying and recording inventory receipts.

The purchase orders list the name of the vendor and the quantities of the materials ordered.

A possible error that this system could allow is:

Options :

A : Payment to unauthorized vendors.

B : Payment for unauthorized purchases.

C : Overpayment for partial deliveries.

D : Delay in recording purchases.

Answer: C