1. During the audit of assets, an internal auditor believes that several items were classified as assets when they should have been classified as expenses. To whom should the internal auditor report these concerns to?

a.Discuss the matter with the chief audit executive

b. Discuss the matter with senior management to determine if the classifications are correct.

c. Consult with legal counsel for advice.

d. Discuss the matter with the general accountant who classified the transactions

2. Internal auditors can evaluate the effectiveness of internal controls over the purchasing function by reviewing:

a. The daily tasks of the purchasing department including requisitioning, ordering, and purchase approval.

b. The policies regarding separation of the custody of inventory from the authorization to order inventory.

c. The policies for the physical count of inventory

d. The policies regarding the authorization to order inventory and the recording keeping functions for inventory.

3. Under the Sarbanes-Oxley Act of 2002, companies are now required to implement anti-fraud programs and controls that they evaluate on an annual basis as part of their integrated audit. A common component of such anti-fraud programs and controls is the effective design and implementation of codes of ethics and conduct. Which one of the following is not a characteristic of the operating effectiveness of a code of conduct?

a. The existence of a plan to communicate the code of conduct to all (or covered) employees of the company

b. The existence of an appropriate "hot-line" or whistle blowing to report any violations with the company's code of conduct

c. Audit committee involvement and oversight of non-compliance with the company's code of conduct

d. Lack of employee training in the company's code of conduct upon hiring and periodically thereafter

4. Which one of the following is an example of monitoring controls?

1. Internal audits
2. Audit committee reviews
3. Management reviews

a. 2 only

b. 1 only

c. 3 only

d. 1, 2, and 3