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NEW QUESTION # 79
Which of the following is the most common method of fraud detection?

• A. Analytical reviews of high-risk areas.
• B. Unannounced audits or reviews of programs or departments.
• C. Tips received from employees or citizens.
• D. Detective controls built into the daily processes.

Answer: C

NEW QUESTION # 80
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. Set clear performance standards for internal auditors and the internal audit activity.
• B. Maintain industry-specific knowledge appropriate to the audit engagements
• C. Apply problem-solving techniques for routine situations.
• D. Manage and support a quality assurance and improvement program.

Answer: A

NEW QUESTION # 81
Which of the following actions does not violate the IIA Code of Ethics or Standards?

• A. An internal auditor disclosing details of an audit report to colleagues from a different organization.
• B. An internal auditor performing an audit on procedures that they were responsible for creating.
• C. An internal auditor disclosing confidential information in response to a lawsuit.
• D. An internal auditor performing an audit on an operation that they managed less than a year ago.

Answer: C

NEW QUESTION # 82
Which of the following best explains why integrity is a necessary personal quality for internal auditors at all levels?

• A. Internal auditor integrity enables the internal audit activity to be able to demonstrate independence.
• B. Internal auditor integrity enables stakeholders to constantly question the work of the internal audit activity.
• C. Internal auditor integrity enables the internal auditor to avoid being challenged by any party in the organization.
• D. Internal auditor integrity enables users of internal auditors' work to make important business decisions.

Answer: D

NEW QUESTION # 83
Which of the following is an example of a risk management avoidance response?

• A. Outsourcing production.
• B. Exiting a marketplace.
• C. Obtaining product insurance.
• D. Recalling a product.

Answer: B

NEW QUESTION # 84
As a matter of policy, the chief audit executive routinely rotates internal audit staff assignments and periodically interviews the staff to discuss the potential for conflicts of interest. These actions help fulfill which of the following internal audit mandates?

• A. Individual proficiency.
• B. Professional objectivity.
• C. Due professional care.
• D. Organizational independence.

Answer: B

NEW QUESTION # 85
Which of the following statements describes impairment to the internal auditor's objectivity?

• A. An internal auditor reduces the scope of an audit engagement due to budget restrictions.
• B. An internal auditor receives a promotional gift that is available to the organization's employees.
• C. An internal auditor reviews a purchasing agent's contract drafts prior to their execution.
• D. An internal auditor performs an assessment of the operations for which he was recently responsible.

Answer: D

NEW QUESTION # 86
The chief audit executive (CAE) has been asked to manage the regulatory compliance function for the organization's retail store operations. Store operations are included in the annual audit plan.
Which of the following strategies best fulfills the requirements of the Standards regarding these audits?

• A. A store operations compliance audit should be performed by a staff internal auditor under the direction of the CAE.
• B. The scope of store operations audits should exclude compliance.
• C. Store operations audits should be performed by an external service provider.
• D. Store operations audits can be fully executed with appropriate disclosure to the board.

Answer: C

NEW QUESTION # 87
Which of the following options is the most cost-effective and efficient way for internal auditors to keep current with the latest developments in the internal audit profession?

• A. Attending annual professional conferences and seminars.
• B. Maintaining membership in The HA and similar professional organizations and subscribing to relevant email updates or news feeds.
• C. Pursuing as many professional certifications as possible.
• D. Participating in on-the-job training in various departments of the organization.

Answer: B

NEW QUESTION # 88
Which of the following is a common type of payroll fraud?

• A. Unauthorized overtime.
• B. Unearned bonuses or commissions.
• C. Fictitious employees.
• D. Skimming.

Answer: C

NEW QUESTION # 89
According to the IIA guidance, who is responsible for periodically assessing the internal audit activity?

• A. The external auditors.
• B. The chief audit executive.
• C. Senior management.
• D. The board.

Answer: B

NEW QUESTION # 90
According to The IIA's Code of Ethics, which of the following statements is true?

• A. When an internal auditor releases required information to a regulator, resulting in a significant loss through fines and penalties for the organization, he fails to add value.
• B. When an internal auditor continues with an audit engagement, despite the audit client's claims that the work performed is unnecessary and redundant he fails to demonstrate competency.
• C. When an internal auditor disagrees with the treatment received by workers in the organization's foreign subsidiary and alters the audit program to highlight the issue, he fails to demonstrate objectivity.
• D. When an internal auditor limits the scope of the audit engagement after learning that management is hiding relevant information, he demonstrates integrity.

Answer: C

NEW QUESTION # 91
An internal auditor completed an audit of a bank's loan department and found all significant risks to be managed adequately through effective internal controls. Which of the following would be an appropriate conclusion to report to management?

• A. The residual risk is lower than or equal to the risk appetite.
• B. The residual risk is higher than or equal to the risk appetite.
• C. The inherent risk is higher than or equal to the risk tolerance.
• D. The inherent risk is lower than or equal to the risk tolerance.

Answer: A

NEW QUESTION # 92
Which of the following scenarios exemplifies a potential internal control weakness?

• A. The same employee who receives cash from customers prepares a prelisting of cash receipts.
• B. The same employee who records cash receipts in the accounts receivable subsidiary ledger ensures that the ledger automatically updates the information.
• C. The same employee who makes deposits at the bank prepares the monthly bank reconciliation.
• D. The same employee who restrictively endorses checks received from customers prepares the bank's check deposit slips.

Answer: C

NEW QUESTION # 93
An accounts receivable clerk receives cash payments, posts the payments to customer accounts, and prepares the daily cash deposit.
The clerk has been stealing some cash and manipulating the customer payments to hide the theft.
This fraud could be detected with which of the following controls?

• A. Total cash deposits for the month are reconciled to the cash receipts journal.
• B. Total cash deposits are compared with the bank reconciliation.
• C. Monthly bank reconciliations are performed by the clerk on a timely basis.
• D. Names, amounts, and dates on remittance advices are reconciled with the names, amounts, and dates recorded in the cash receipts journal.

Answer: D

NEW QUESTION # 94
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