Q45. The chief risk officer (CRO) of a large manufacturing organization decided to facilitate a workshop for process managers and staff to identify opportunities for improving productivity and reducing defects. Which of the following is the most likely reason the CRO chose the workshop approach?

Q46. Which of the following is a preventive control for fraud?

Q47. During an assurance engagement, an internal auditor discovered that a sales manager approved numerous sales contracts for values exceeding his authorization limit. The auditor reported the finding to the audit supervisor, noting that the sales manager had additional new contracts under negotiation. According to IIA guidance, which of the following would be the most appropriate next step?

Q48. An internal auditor recommended that an organization implement computerized controls in its sales system in order to prevent sales representatives from executing contracts in excess of their delegated authority levels. A follow-up review found that the sales system had not been modified, but a process had been implemented to obtain written approval by the vice president of sales for all contracts in excess of $1 million. The chief audit executive (CAE) would be justified in reporting this situation to the organization’s board iF.
I.
In the opinion of the CAE, the level of residual risk assumed by senior management is too high.
II.
Testing of compliance with the new process finds that all new contracts in excess of $1 million have been approved by the vice president of sales.
III.
The cost of modifying the sales system to include a preventive control is less than $100,000.

Q49. Reviewing internal audit report drafts with clients is:
1.Required according to the Standards.
2.A form of courtesy.
3.Ethically mandated.
4.A form of validation.

Q50. During an interview with a manager in a company’s claims department, an auditor noted that the manager became nervous and changed the subject whenever the auditor raised questions about certain types of claims.
The manager’s answers were consistent with company policies and procedures. When documenting the interview, the auditor should:

Q51. As part of an operational audit, an auditor compared records of current inventory with usage during the prior two-year period and determined that the spare parts inventory was excessive. What step should the auditor perform first?

Q52. An audit of customer accounts receivable found that outstanding receivables as a percentage of revenue had increased significantly during the past two years. The increase was attributed to the extension of credit, at the urging of the marketing department, to a number of companies that were not credit worthy. Which of the following would be least useful in monitoring the disposition of this finding?

Q53. As a result of a recent discovery of false information on employment applications, an internal auditor has reviewed hiring procedures. Which of the following represents a weakness in the control system?
I. Applicants are not required to have their signed applications legally authenticated.
II. Applicants’ educational information is not validated with the educational institution before employment is offered.
III. Information related to applicants’ long-term work history is not validated before employment is offered.

Q54. Which of the following actions is related to the preliminary survey process?

Q55. The chief audit executive established an internal audit activity (IAA) performance standard requiring all audit reports to be issued within 48 hours of the exit meeting with the client. Which of the following describes an exit meeting strategy that would best help the IAA meet this performance standard?

Q56. According to the Standards, which of the following best describes what must be agreed upon to establish an understanding with clients prior to starting a consulting engagement?

Q57. —-
According to IIA guidance,which of the following is true about the supervising internal auditor’s review notes?
They are discussed with management prior to finalizing the audit.
They may be discarded after working papers are amended as appropriate.
They are created by the auditor to support her fieldwork in case of questions.
They are not required to support observations issued in the audit report.

Q58. The chief audit executive (CAE) notes during review of the final report of an assurance engagement that management has decided to accept the risks of two significant exposures identified by the audit. Which of the following actions by the CAE would be least prudent in these circumstances?

Q59. During an audit of a branch bank, an internal auditor learned that a series of system failures had resulted in a four-day delay in processing customers’ scheduled payroll direct deposits. The first failure was that of a disk drive, followed by software and other minor failures. Which of the following controls should the auditor recommend to avoid similar delays in processing?

Q60. The most effective method of reporting engagement results to management and stimulating action is to:

Q61. A chief audit executive (CAE) is evaluating four potential audit engagements based on the following factors: the engagement’s ability to reduce risk to the organization, the engagement’s ability to save the organization money, and the extent of change in the area since the last engagement. The CAE has scored the engagements for each factor from low to high, assigned points, and calculated an overall ranking. The results are shown below with the points in parentheses:
Risk Reduction Cost Savings Changes
High (3) Medium (2) Low (1)
High (3) Low (1) High (3)
Low (1) High (3) Medium (2)
Medium (2) Medium (2) High (3)
If the organization has asked the CAE to consider the cost savings factor to be twice as
important as any other factor, which engagements should the CAE pursue?

Q62. Which of the following is most appropriate when conducting an interview during the course of a fraud investigation?

Q63. During a fraud interview, it was discovered that unquestioned authority enabled a vice president to steal funds from the organization. Which of the following best describes this condition?

Q64. An organization has an opening for an entry-level internal audit position. When interviewing for the position, which of the following is the least important skill for an entry-level internal auditor?

Q65. Which of the followings statements describes a best practice regarding assurance engagement communication activities?

Q66. Which of the following best describes how an internal auditor would use a flowchart during engagement planning?

Q67. During an operational audit of a chain of pizza delivery stores, an auditor determined that cold pizzas were causing customer dissatisfaction. A review of oven calibration records for the last six months revealed that adjustments were made on over 40 percent of the ovens. Based on this, the auditor: