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QUESTION 74
An organization is facing a financial downturn and needs to impose major budget reductions to all departments. According to MA guidance, which of the following actions is most appropriate for the board to take to evaluate the potential impact on the internal audit activity?

QUESTION 75
During an audit engagement, the internal auditor discussed a risk mitigation recommendation with the manager of the area under review. The manager disagreed with the risk assessment and recommendation. The two failed to come up with an alternative solution, and the auditor decided to proceed with including the original recommendation in the engagement report. Which of the following is especially important in dealing with this type of situation?

QUESTION 76
When auditing the award of a major contract, which of the following should an internal auditor suspect as a red flag for a bidding fraud scheme?
1. Subsequent change orders increase requirements for low-bid items.
2. Material contract requirements are different on the actual contract than on the request for bids.
3. A high percentage of employees are charged to indirect accounts.
4. Losing bidders are hired as subcontractors.

QUESTION 77
Evidence discovered during the course of an engagement suggests that multiple incidents of fraud have occurred. There do not appear to be sufficient controls in place to prevent reoccurrence. Which of the following is the internal auditor’s most appropriate next step?

QUESTION 78
What type of risk management strategy is being employed when an organization installs two firewalls to provide protection from unauthorized access to the network?

QUESTION 79
According to the Standards, which of the following best describes why initial audit test results should be reported to the auditor-in-charge prior to advising management?

QUESTION 80
What is the primary purpose of a fishbone diagram?

QUESTION 81
According to IIA guidance, which of the following is least compliant with the requirements regarding an internal auditor’s need for objectivity?

QUESTION 82
Which of the following is true regarding the use of a formal risk management framework?
1. It facilitates a methodical approach to risk mitigation.
2. It defines and standardizes the terminology used in risk communication.
3. It establishes the risk tolerance levels to be accommodated in the strategy.
4. It facilitates the alignment of risk mitigation strategies with management priorities.

QUESTION 83
According to IIA guidance, which of the following is the best example of a system application control?

QUESTION 84
Which of the following is an example of a transaction-level control?

QUESTION 85
An organization has implemented a software system that requires a supervisor to approve transactions that would cause treasury dealers to exceed their authorized limit. This is an example of which of the following types of controls?

QUESTION 86
A government agency maintains a system of internal control, according to the COSO model, and has made a change to its employee performance reviews and rewards program. This change relates to which of the following components of COSO’s internal control framework?

QUESTION 87
Which of the following is not a role of the internal audit activity in facilitating risk identification and evaluation?

QUESTION 88
Which of the following is an example of a detective control?

QUESTION 89
Management of a publicly-held organization requires the internal audit activity to be involved with quarterly financial statements, which are made public and used internally. Which of the following explanations of management’s decision is least plausible?

QUESTION 90
The management at a national consumer goods organization implements a fair work and pay practice as well as a policy to treat employees equitably and consistently. Which common characteristics of fraud will the practice and policy most likely reduce?

QUESTION 91
Which of the following would be considered a violation of The IIA’s mandatory guidance on independence?

QUESTION 92
Which of the following conditions is the most likely indicator of fraud?

QUESTION 93
According to IIA guidance, when preparing the charter for the internal audit activity, the chief audit executive (CAE), board, and senior management should agree on which of the following?
1. The standards to be used by the internal audit activity.
2. The internal audit activity’s code of ethics.
3. The CAE’s reporting line.
4. The internal audit activity’s responsibilities.