Question 1

Checklists used to assess audit risk have been criticized for all of the following reasons except:

Options :

A : A.Providing a false sense of security that all relevant factors are addressed.

B : D.Being incapable of translating the experience or sound reasoning intended to be captured by each item on the checklist.

C : B.Inappropriately implying equal weight to each item on the checklist.

D : C.Decreasing the uniformity of data acquisition.

Answer: D

Question 2

The charter of the internal auditing department should:

Options :

A : Describe audit programs to be carried out.

B : Authorize access to records, personnel, and physical properties relevant to the performance of audits.

C : Define the audit department-s work schedule, staffing plan, and financial budget.

D : Provide recommended formats to report significant audit findings and recommendations.

Answer: B

Question 3

Which of the following best demonstrates that appropriate and sufficient resources were allocated to an audit engagement to achieve its objectives?

Options :

A : Staff skills audit.

B : Approved engagement work program.

C : Post-engagement survey of management of the audited area.

Answer: B

Question 4

An entity should consider the cost of a control in relationship to the risk. Which of the following controls best reflects this philosophy for a large dollar investment in heavy machine tools?

Options :

A : Having all dispositions approved by the vice president of sales.

B : Placing security guards at every entrance 24 hours a day.

C : Conducting a weekly physical inventory.

D : Imprinting a controlled identification number on each tool.

Answer: D

Question 5

The internal auditors are assessing the risk of fraud involving senior management. An impact factor is

Options :

A : Potential override of internal controls.

B : Unusual transactions.

C : Fines and penalties.

D : Inadequacy of internal controls.

Answer: C