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NEW QUESTION 106
Which of the following would provide the most relevant assurance that the application under development will provide maximum value to the organization?
- A. Adequate software documentation.
- B. End-user involvement.
- C. Formalized non-regression testing phase.
- D. Use of a formal systems development lifecycle.
Answer: B
NEW QUESTION 107
A snow removal company is conducting a scenario planning exercise where participating employees consider the potential impacts of a significant reduction in annua snowfall for the coming winter. Which of the following best describes this type of risk?
- A. Inherent.
- B. Residual.
- C. Net.
- D. Accepted.
Answer: A
NEW QUESTION 108
Which of the following statements is false regarding audit criteria?
- A. Audit criteria should equate to good or acceptable management practices.
- B. Audit criteria should provide flexibility but allow identification of nonadherence.
- C. Audit criteria should be consistent across audit assignments.
- D. Audit criteria should represent reasonable standards against which to assess existing conditions.
Answer: C
NEW QUESTION 109
An organization decided to install a motion detection system in its warehouse to protect against after-hours theft. According to the COSO enterprise risk management framework, which of the following best describes this risk management strategy?
- A. Avoidance.
- B. Sharing.
- C. Elimination.
- D. Reduction.
Answer: D
NEW QUESTION 110
Which of the following documents is most appropriate in promoting the objectivity of the internal audit activity?
- A. Acceptance of gifts policy.
- B. Risk management framework.
- C. Usage of IT system policy.
- D. Personal responsibility policy.
Answer: A
NEW QUESTION 111
According to IIA guidance, which of the following scenarios demonstrates an internal auditor exercising due professional care?
When auditing investments, the auditor identified instruments with which he was unfamiliar.
He decided not to select that type of investment in his sample, as he did not have the knowledge needed to A. perform a proper assessment.
- A. He identified a junior auditor to conduct the work for him on a complex area of the organization.
- B. An auditor was reviewing inventory counts conducted by the warehouse staff. One truck containing an immaterial amount of inventory was off-site and wasn't verified by the auditor.
- C. An auditor in charge needed to have testing completed by the end of the month, but was behind schedule.
- D. An auditor visited a plant that produces a significant portion of the organization's inventory. The day he arrived, the plant manager was out sick, so the auditor issued the report without interviewing the manager.
Answer: B
NEW QUESTION 112
The newly appointed chief audit executive (CAE) of a large multinational corporation, with seasoned internal audit departments located around the world, is reviewing responsibilities for engagement reports. According to IIA guidance, which of the following statements is true?
- A. The CAE may delegate responsibility for reviewing, approving and signing engagement reports, but should review the reports after they are issued.
- B. The CAE is required to review, approve, and sign all regulatory compliance engagement reports only
- C. The CAE is required to review, approve, and sign every engagement report.
- D. The internal audit charter must identify authorized signers of engagement reports.
Answer: A
NEW QUESTION 113
Which of the following is true regarding the COSO enterprise risk management framework?
- A. Control environment is one of the framework's eight components.
- B. The framework facilitates effective risk management, even if objectives have not been established.
- C. The framework integrates with, but is not dependent upon, the corresponding internal control framework.
- D. The framework categorizes an organization's objectives to distinct, non overlapping objectives.
Answer: C
NEW QUESTION 114
Which of the following factors is considered a disadvantage of vertical integration?
- A. It may limit the organization's ability to differentiate the product.
- B. It may lead to limited control of proprietary knowledge.
- C. It may reduce the flexibility to change partners.
- D. It may not reduce the bargaining power of suppliers.
Answer: C
NEW QUESTION 115
Which of the following statements regarding database management systems is not correct?
- A. The database management system acts as a layer between the application software and the operating system.
- B. Applications pass on the instructions for data manipulation which are then executed by the database management system.
- C. Database management systems handle data manipulation inside the tables, rather than it being done by the operating system itself in files.
- D. The data within the database management system can only be manipulated directly by the database management system administrator.
Answer: D
NEW QUESTION 116
Which of the following is a primary objective of the theory of constraints?
- A. Lowered inventory levels.
- B. Full or near capacity in processes.
- C. Smooth workflow among processes.
- D. Few or no defects.
Answer: B
NEW QUESTION 117
Which of the following application-based controls is an example of a programmed edit check?
- A. Input error correction.
- B. Reasonableness check.
- C. Transaction log.
- D. Authorization for access.
Answer: B
NEW QUESTION 118
Which of the following statements about COBIT is not true?
- A. COBIT control objectives are specific to various IT platforms and help determine minimum controls.
- B. COBIT helps management understand and manage the risks associated with information technology (IT) processes.
- C. COBIT provides management with the capability to conduct self-assessments against industry best practices.
- D. Management needs to determine the cost-benefit ratio of adopting COBIT control objectives.
Answer: A
NEW QUESTION 119
Data encryption is an example of which of the following controls?
- A. Application control.
- B. IT general control
- C. Data output control
- D. Data input control
Answer: B
NEW QUESTION 120
Which of the following best describes the misdirection of payments on accounts receivable to an employee's bank account?
- A. Fraud hidden on the books.
- B. Fraud off the books.
- C. Fraud open on the books.
- D. Fraud on the balance sheet.
Answer: B
NEW QUESTION 121
Which of the following statements are true regarding the use of heat maps as risk assessment tools?
1. They focus primarily on known risks, limiting the ability to identify new risks.
2. They rely heavily on objective assessments and related risk tolerances.
3. They are too complex to provide an easily understandable view of key risks.
4. They are helpful but limited in value in a rapidly changing environment.
- A. 3 and 4 only
- B. 2 and 3 only
- C. 1 and 4 only
- D. 1 and 2 only
Answer: C
NEW QUESTION 122
Refer to the exhibit.
A company's financial balance sheet is presented below:
The company has net working capital of:
- A. $210
- B. $490
- C. $160
- D. $350
Answer: A
NEW QUESTION 123
Who is responsible for setting the risk appetite?
- A. Operations management.
- B. Board of directors.
- C. Chief risk officer.
- D. External auditors.
Answer: B
NEW QUESTION 124
According to IIA guidance, which of the following must the internal auditor consider to meet the requirements for due professional care?
- A. The appropriateness of assurance procedures necessary to ensure all significant risks will be identified.
- B. The training courses necessary to enhance the internal auditor's knowledge, skills, and other competencies.
- C. The use of innovative technology and data analysis techniques.
- D. The extent of work needed to achieve the engagement's objectives.
Answer: D
NEW QUESTION 125
Which of the following has the greatest effect on the efficiency of an audit?
- A. The organization and content of workpapers.
- B. The complexity of deficiency findings.
- C. The adequacy of preliminary survey information.
- D. The method and amount of supporting detail used for the audit report.
Answer: C
NEW QUESTION 126
According to IIA guidance, which of the following must internal auditors consider to conform with the requirements for due professional care during a consulting engagement?
1. The cost of the engagement, as it pertains to audit time and expenses in relation to the potential benefits.
2. The needs and expectation of clients, including the nature, timing, and communication of engagement results.
3. The application of technology-based audit and other data analysis techniques, where appropriate.
4. The relative complexity and extent of work needed to achieve the engagement's objectives.
- A. 1, 2, and 3
- B. 1, 2, and 4
- C. 1, 3, and 4
- D. 2, 3, and 4
Answer: B
NEW QUESTION 127
International marketing activities often begin with:
- A. Domestic marketing.
- B. Standardization.
- C. Limited exporting.
- D. Global marketing.
Answer: C
NEW QUESTION 128
According to IIA guidance, which of the following is least likely to be a key financial control in an organization's accounts payable process?
- A. Compare employee addresses to vendor addresses to identify potential employee fraud.
- B. Monitor customer quality complaints compared to the prior period to identify vendor issues.
- C. Require the approval of additions and changes to the vendor master listing, where the inherent risk of false vendors is high.
- D. Monitor amounts paid each period and compare them to the budget to identify potential issues.
Answer: B
NEW QUESTION 129
Which of the following responsibilities would fall under the role of the chief audit executive, rather than internal audit staff or the audit manager?
- A. Maintain industry-specific knowledge appropriate to the audit engagements
- B. Manage and support a quality assurance and improvement program.
- C. Apply problem-solving techniques for routine situations.
- D. Set clear performance standards for internal auditors and the internal audit activity.
Answer: D
NEW QUESTION 130
Which of the following statements is true regarding reversing entries in an accounting cycled
- A. Reversing entries are identical to the adjusting entries made in the previous period.
- B. Reversing entries should be completed at the end of the next accounting period after recording regular transactions of the period
- C. Reversing all previous closing adjustments is a mandatory step in the accounting cycle
- D. Reversing entries are the exact opposite of the adjustments made in the previous period.
Answer: D
NEW QUESTION 131
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