According to the International Professional Practices Framework, internal auditors should possess which of the following competencies?

I. Proficiency in applying internal auditing standards, procedures, and techniques.

II. Proficiency in accounting principles and techniques.

III. An understanding of management principles.

IV.

An understanding of the fundamentals of economics, commercial law, taxation, finance, and quantitative methods.

A.

I only

B.

II only

C.

I and III only

D.

I, III, and IV only

A quantitative risk assessment model has all of the following advantages except:

A. Accommodating a large number of risk factors in the assessment.

B. Providing documentation for the chief audit executive, who must defend the long-range audit plan.

C. Providing a systematic method of applying weightings to risks and priorities.

D. Removing the need for judgment on the part of the chief audit executive.

An internal quality assessment of the internal audit activity should provide the chief audit executive with.

A. Recommendations for improvement.

B. Objectives for internal audit engagements.

C. Confirmation of action on past audit recommendations.

D. Appraisals of internal audit staff performance.

An organization's chief audit executive (CAE) has been asked to conduct an assurance engagement for an information technology system that was subject to a consulting engagement in the prior year. How should the CAE respond?

A. Decline the engagement because independence and objectivity would be impaired.

B. Delay the assurance engagement to ensure that there is a two-year period between the engagements.

C. Accept the engagement and assign different auditors to conduct the assurance services.

D. Facilitate a control self-assessment workshop instead of performing an assurance engagement.

Which of the following is the best example of a strategic objective?

A. Opening a new product line.

B. Adhering to laws and regulations.

C. Attaining a specified sales target.

D. Safeguarding assets.

Suspecting fraud, the chief financial officer (CFO) asked the internal audit activity to investigate a significant increase in travel related expenditures. Work was performed by a qualified internal auditor. Following the completion of the engagement, the chief audit executive (CAE) reported to the CFO that no violations were found and no fraud had occurred.

According to the Standards, which of the following principles did the CAE violate?

A. Due professional care.

B. Individual objectivity.

C. Proficiency.

D. Organizational independence.

An internal audit manager of a furniture manufacturing organization is planning an audit of the procurement process for kiln-dried wood. The procurement department maintains six procurement officers to manage 24 different suppliers used by the organization.

Which of the following controls would best mitigate the risk of employees receiving kickbacks from suppliers?

A. The periodic rotation of procurement officers' assignments to supplier accounts.

B. A pre-award financial capacity analysis of suppliers.

C. An automated computer report, organized by supplier, of any invoices for the same amount.

D. Periodic inventories of kiln-dried wood at the organization's warehouse.

The director of purchasing, a certified internal auditor (CIA), signs a contract to procure a large order from a supplier whose products provide the best price, quality, and performance. A few days after signing the contract, the supplier presents the CIA with $1, 000 as a gift. Which statement regarding acceptance of the money is correct?

A. Accepting the money would be prohibited only if it were non-customary.

B. Accepting the money would violate the IIA Code of Ethics.

C. Because the CIA is not acting as an internal auditor, accepting the money would be governed only by the organization's code of conduct.

D. Because the contract was signed before the money was offered, accepting the money would not violate the IIA Code of Ethics.

Which of the following best describes the misdirection of payments on accounts receivable to an employee's bank account?

A. Fraud open on the books.

B. Fraud hidden on the books.

C. Fraud off the books.

D. Fraud on the balance sheet.

An internal auditor in a small broadcasting organization was assigned to review the revenue collection process. The auditor discovered that some checks from three customers were never recorded in the organization's financial records. Which of the following documents would be the least useful for the auditor to verify the finding?

A. Bank statements.

B. Customer confirmation letters.

C. Copies of sales invoices.

D. Copies of deposit slips.