Question 1

This chief audit executive (CAE) engaged an internal auditor to consult on an organization's complex information technology system. Shortly after beginning the engagement, the auditor unexpectedly resigned. Unfortunately, this auditor was the only available auditor with the necessary expertise. The CAE will not be able to hire someone with similar expertise in time to meet a regulatory deadline.

Which of the following would be the best course of action for the CAE to take?

Options :

A : Continue with the engagement in order to meet the regulatory deadline, but highlight areas in the final report that might need to be revised in the future.

B : Ask that a senior member of the organization-s IT department with the required systems expertise join the audit team to assist in completing the engagement

C : Delay the engagement and inform the board of the situation, asking them to provide acceptable alternatives for completing the engagement

D : Remove the planned engagement from the audit plan and explain to senior management the problems with moving forward without an auditor with the

Answer: C

Question 2

Which of the following process weaknesses is most likely to cause an internal auditor the most concern about fraud risk?

Options :

A : Final employee payroll list is belatedly sent to the bank for payment processing.

B : Employee salary is calculated by the payroll system without further verification.

C : Employee personal records in the permanent file are not updated in a timely manner.

D : Employee personal information in the payroll system could be updated without approval.

Answer: D

Question 3

Which of the following is a primary benefit of implementing a governance, risk management, and compliance framework within an organization?

Options :

A : Fewer internal audits.

B : More effective interviews.

C : Automated risk management strategy tools.

D : Reduced assurance costs.

Answer: D

Question 4

Which of the following is the most appropriate way to ensure that a newly formed internal audit activity remains free from undue influence by management?

Options :

A : Appoint the chief audit executive as a member of the board.

B : Adopt written policies and procedures for the internal audit activity, approved by the board.

C : Ensure the chief audit executive reports administratively to the audit committee.

D : Establish the internal audit activity-s position within the organization in an audit charter.

Answer: D

Question 5

Suspecting fraud, the chief financial officer (CFO) asked the internal audit activity to investigate a significant increase in travel related expenditures. Work was performed by a qualified internal auditor. Following the completion of the engagement, the chief audit executive (CAE) reported to the CFO that no violations were found and no fraud had occurred.

According to the Standards, which of the following principles did the CAE violate?

Options :

A : Due professional care.

B : Individual objectivity.

C : Proficiency

D : Organizational independence.

Answer: A