IIA-Certified Internal Auditor - Part 2, Conducting the Internal Audit Engagement Set 3

1.

An internal auditor for a financial institution has just completed an audit of loan processing. Of the 81 loans approved by the loan committee, the auditor found seven loans which exceeded the approved amount.
Which of the following actions would be inappropriate on the part of the auditor?

Examine the seven loans to determine if there is a pattern. Summarize amounts and include in the
engagement final communication. Report the amounts to the loan committee and leave it up to them to correct. Take no further follow- upaction at this time and do not include the items in the engagement final communication. Follow up with the appropriate vice president and include the vice president's acknowledgment of thesituation in the engagement final communication. Determine the amount of the differences and make an assessment as to whether the dollar differencesare material. If the amounts are not material, not in violation of government regulations, and can be
rationally explained, omit the observation from the engagement final communication.

2.

During a systems development audit, software developers indicated that all programs were moved from the development environment to the production environment and then tested in the production environment.
What should the auditor recommend?

Implement a test environment to ensure that testing is not performed in the production environment.
II. Require developers to move modified programs from the development environment to the test
environment and from the test environment to the production environment.
III. Eliminate access by developers to the production environment. I only III only I and II only I and III only

3.

A post-audit questionnaire sent to audit clients is an effective mechanism for:

Substantiating audit observations. Promoting the internal audit activity. Improving future audit engagements. Validating process flow.

4.

Which of the following must an auditor establish in order to demonstrate that fraud has occurred?

Monetary damage to the victim. The suspect's intent. Existence of an internal control deficiency. Evidence of collusion.

5.

Which of the following would be the least important reason for a company to merge with another company?

To diversify risk. As a response to new government policy. To reduce labor costs. To increase stock prices.

6.

Which of the following potential performance measures should an auditor recommend excluding from a performance scorecard?

Number of employees. Market share. Number of customer complaints. Training dollars per employee.

7.

Which of the following is the best approach for obtaining feedback from engagement clients regarding the quality of internal audit work?

Ask questions during the exit interviews and send copies of the documented responses to the clients. Call engagement clients after the exit interviews and send copies of the documented responses to theclients. Distribute questionnaires to selected engagement clients shortly before preparing the internal auditannual activity report. Provide questionnaires to engagement clients at the beginning of each engagement and request thatthe clients complete and return them after the engagements.

8.

After completing a fraud investigation but before publishing a formal written report, the chief audit executive should submit a draft of the final report to the organization's:

Legal counsel. External auditor. Audit committee chairperson. Chief executive officer.

9.

Senior management of an organization has requested that the internal audit activity provide ongoing internal control training for all managerial personnel. This is best addressed by:

A formal consulting engagement. An informal consulting engagement. A performance assurance engagement. An operational assurance engagement.

10.

A key to effective benchmarking in a consulting engagement is identifying the issues that can be:

Reviewed by all internal audit staff members. Shared with all internal audit customers. Measured and controlled by the engagement client. Discussed with the board or audit committee.

IIA-Certified Internal Auditor - Part 2, Conducting the Internal Audit Engagement Set 3

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IIA-Certified Internal Auditor - Part 2, Conducting the Internal Audit Engagement Set 3

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