Due to urgent requests from management,a busy internal audit activity finds that it can no
longer meet all of its commitments contained in the annual audit plan. The best course of
action for the chief audit executive to take would be to:

A.

Continue with the plan and seek opportunities to adjust priorities and reallocate resources.

B.

Advise senior management and request that they reconsider these additional requests using more rigorous risk assessment and prioritization factors.

C.

Advise the board and senior management and request a reassessment of the plan.

D.

Advise the board immediately and seek their support for additional resources to meet the needs of the plan.

Which of the following is not an appropriate role of the internal audit activity in governance
activities?

A.

Support the board in enterprise-wide risk assessment.

B.

Ensure the timely implementation of audit recommendations.

C.

Monitor compliance with the organization's ethics policies.

D.

Discuss areas of significant risk.

During an audit engagement,an internal auditor finds that management is not complying
with previous commitments made to the external auditors. However,the auditor determines
management's actions to be justified due to significant changes in the business. The best
course of action for the auditor to take would be to:

A.

Proceed with the audit engagement and assess the changes actually implemented by management.

B.

Inform the external auditors and seek their guidance.

C.

Inform the external auditors and remove the associated work from the internal audit scope.

D.

Compare the recommended changes against the changes made by management and advise management which action to take.

When performing benchmarking during the planning phase of a performance audit,an
internal auditorshould:

A.

Determine the current performance gap.

B.

Project future performance levels.

C.

Develop functional action plans.

D.

Identify comparative organizations.

Which of the following would be most relevant regarding the internal control environment?

A.

Assessing controls over computerized applications.

B.

Documenting the organizational structure.

C.

Comparing and validating internal performance with external benchmarking.

D.

Maintaining and reviewing detailed financial records.

In selecting an instructional strategy for developing internal audit staff,a chief audit
executive should first reviewthe:

A.

Department's budget constraints.

B.

Internal auditors' personal development needs.

C.

Content of potential training courses.

D.

Organization's objectives.

Which of the following statements is correct regarding corporate compensation systems
and related bonuses?
I.A bonus system should be considered part of the control environment of an organization
and should be considered in formulating a report on internal control.
II.Compensation systems are not part of an organization's control system and should not
be reported as such.
III.An audit of an organization's compensation system should be performed independently
of an audit of the control system over other functions that impact corporate bonuses.

A.

Ionly

B.

IIonly

C.

IIIonly

D.

II and IIIonly

The primary reason that a chief audit executive (CAE) reviews external audit management
letters and management response is to:

A.

Select areas to emphasize in future internal audit engagements.

B.

Check the effectiveness of external audit resources used.

C.

Ensure that comments in the letter are supported by evidence.

D.

Verify that there has been no duplication of internal audit work.

Which of the following is most likely to be an element of an effective compliance program?

A.

The internal audit activity is assigned responsibility for overseeing the program.

B.

The program is communicated to employees in a video format on a one-time basis.

C.

The organization uses monitoring systems designed to detect improper activity.

D.

The organization obtains as much information as possible when performing background
checks on employees.

The best reason for separating the cash-receiving function from the related record-keeping
function is to:

A.

Segregate cash payments from cash receipts.

B.

Provide accountability for cash received.

C.

Minimize misappropriations in cash receipts.

D.

Improve physical security over the cash-receiving function.