Question # 1

Which of the following enhances the independence of the internal audit activity? 

A. The chief audit executive (CAE) approves the annual internal audit plan.
B. The CAE administratively reports to the board.
C. The audit committee approves the CAE's annual salary increase.
D. The chief executive officer approves the internal audit charter.

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Question # 2

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 lower than or equal to the risk tolerance. 
D. The inherent risk is higher than or equal to the risk tolerance. 

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Question # 3

According to the COSO internal control framework, which of the following best describes the use of continuous auditing programs by the internal audit activity?

A. Control environment.
B. Control activities.
C. Risk assessment.
D. Monitoring.

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Question # 4

During an audit, the client questions the internal audit activity's authority to perform procedures over fraud allegations. According to HA guidance, which of the following would provide the most relevant support to respond to the client's concerns?

A. Definition of Internal Auditing.
B. MA Standards.
C. Internal audit charter.
D. The IIA's Code of Ethics

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Question # 5

A new director was hired to lead the internal audit activity at a small start-up company. Which of the following assignments would impair the director's independence? 

A. Preparing the financial statements for the company's defined contribution plan.
B. Performing a pre-implementation review of the company's payroll application.
C. Providing the COBIT framework as a possible IT management tool.
D. Reviewing the company's policy for foreign currency translation adjustments for compliance with accounting standards.

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Question # 6

What is the primary benefit to the internal audit activity for undertaking an internal quality assessment?

A. To help the internal audit activity complete its annual assurance plan.
B. To identify inefficiencies within the internal audit team.
C. To help improve the overall quality of the internal audit activity's work.
D. To identify key risks and areas of concern within the organization.

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Question # 7

In the area of business acumen, which of the following competencies would be the sole responsibility of an internal audit staff member?

A. Maintaining industry-specific knowledge appropriate to the organization.
B. Assessing how IT contributes to organization objectives, risks, and relevance to audit.
C. Maintaining technical aspects of accounting standards and reporting processes.
D. Understanding regulatory and legal framework and assessing its relevance.

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Question # 8

To fill a critical vacancy, an internal auditor is assigned temporarily to a nonaudit role in the purchasing department, where she worked previously before joining the internal audit activity. According to IIA guidance, which of the following statements is true regarding these circumstances?

A. The chief audit executive (CAE) should review all work performed by the auditor during her temporary assignment to ensure no impairments.
B. The CAE may conduct audits in the purchasing department during the auditor's temporary assignment.
C. The auditor should obtain the CAE's approval as to the nature and scope of the duties she is permitted to perform during her temporary assignment.
D. Any work performed by the auditor during her temporary assignment must conform to the internal audit charter.

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Question # 9

Which of the following are components of the ISO 31000 risk management process?1. Setting the context.2. Risk treatment.3. Risk avoidance.4. Communication.

A. 1 and 2 only.
B. 2 and 3.
C. 3 and 4.
D. 1,2, and 4.

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Question # 10

A chief audit executive (CAE) is reviewing the internal audit activity's performance and is concerned that the average number of revisions to findings is steadily rising, making it increasingly difficult to trace the finding to the supporting evidence and workpapers. According to MA guidance, which of the following elements of the internal audit activity's quality assurance and improvement program would provide the CAE with the most helpful insight into the cause of this problem?

A. The overall effectiveness of the internal audit activity's periodic self assessments.
B. The type of audit productivity and performance statistics reported.
C. The adequacy of the day-to-day supervision and review process.
D. The scope and frequency of external assessments.

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