1. The internal audit activity has recently experienced the departure of two internal auditors who cannot be immediately replaced due to budget constraints. Which of the following is the least desirable option for efficiently completing future engagements, given this reduction in resources?

1. Filling vacancies with personnel from operating departments that are not being audited
2. Employing information technology in audit planning, sampling, and documentation
3. Using self-assessment questionnaires to address audit objectives
4. Eliminating consulting engagements from the engagement work schedule

2. New credit policies have been implemented in the automated order entry system to control collectability. These policies prevent entering any new sales order that would cause the customer's accounts receivable balance to exceed average sales for any two-month period in the prior 12-month period. Divisional sales management has compiled over a dozen examples that show decreased sales and delayed order entry. Division management contends that these examples are a direct result of the new credit policy constraints. Sales management's data and information provides

1. Irrelevant argumentative information
2. Feedback control data on the new corporate credit policy
3. Evidence that the new credit policy is not meeting the stated corporate objective to control the collectability of new sales volume
4. A statistically valid conclusion about the impact on customer goodwill concerning the credit policy

3. During the course of a business process review, an internal auditor may. Select one:

1. Oversee the implementation of recommended controls.
2. Decide which controls to select
3. Provide advice on appropriate controls during system design
4. Lead a system design team

4. An internal auditing manager is assembling an audit team to conduct an assurance audit of the data processing center for a credit card company. Which individual would be the most problematic choice for inclusion on the team, assuming that there is a moderate risk that specialized fraud and IT experience will be necessary?

1. External auditor skilled in information technology security but not fraud auditing
2. Moderately experienced internal auditor with expertise in using fraud detection software
3. Newly hired internal auditor skilled in internal auditing practices but not knowledgeable about the organization or its departments
4. Moderately experienced internal auditor who has special knowledge of the client because she worked there before joining internal auditing

5. An internal audit function is charged with measuring the compliance of the organization's human resources area with applicable laws, regulations, and internal policies. Which of the following objectives would be appropriate for this engagement plan?

1. To ensure that applicant pools represent a fair cross section of the population
2. To assess the process used by human resources to respond to employee complaints
3. To establish proof of citizenship by requiring a birth certificate
4. To question recently hired employees to assess compliance with the interviewing process

6. The audit universe for a large multinational corporation should focus on. Select one:

1. Operating nuances of country and regional entities
2. Employment laws, codes, and practices applicable in each of the countries and regions
3. Opportunities for and threats to achieving the organizations strategic plan
4. Cultural norms and market practices that shape policies and procedures

7. Periodic review of the internal audit charter and presentation to senior management and the board for approval. Select one:

1. is addressed in the IIAs optional guidance and Practice Guide titled, Audit Committee and Internal Audit Activity Charters.
2. Indicates that the internal audit activity has the authority and backing of the board in carrying out its activities, as long as it conforms to the charter.
3. Is optional for small internal audit activities as well as internal audit activities of public sector and non-profit organizations.
4. Is required so that internal audit activities can effectively coordinate work with external and internal assurance providers

8. Which of the following is an example of an efficiency measure? Select one:

1. Rate of absenteeism
2. Goal of becoming a leading manufacturer
3. Number of insurance claims processed per day
4. Rate of customer complaints

9. What are specific commitments to achieve a measurable result within a given time frame?

1. Objectives
2. Missions
3. Visions
4. Strategic plans

10. A Certified Internal Auditor directs the audit function for a large city and is planning the audit schedule for the next year. The city has a number of different funds, some that are restricted in use by government grants and some that require reports to the government. One of the programs for which the city has received a grant is job retraining and placement. The grant specifies certain conditions a participant in the program must meet in order to be eligible for the funding. The auditor plans an audit of the job retraining program to verify that the program complies with applicable grant provisions. One of the provisions is that the city adopt a budget for the program and subsequently follow procedures to ensure that the budget is adhered to and that only allowable costs are charged to the program. In performing an audit of compliance with this provision, which is a valid procedure the auditor can perform?

1. Verify that all funds used include reports to the government.
2. Compare actual results with budgeted results and determine the reason for deviations; then determine if such deviations have been approved by appropriate officials
3. Determine whether the budget was reviewed and approved by supervisory personnel within the granting agency
4. Select a sample of graduates from the training and placement program and survey them to determine if they have been successful after their training.

11. When an audit is assigned, management asks the auditor to evaluate the appropriateness of using self-insurance to minimize risk to the organization. Given the scope of the audit requested by management, should the auditor engage an actuarial consultant to assist in the audit if these skills do not exist in staff?

1. No. The audit department is skilled in assessing controls, and insurance control concepts are not distinctly different from other control concepts
2. No, it is a normal audit function to assess risk; this audit engagement is therefore not unique
3. Yes. An actuary is essential to determine whether the insurance premiums are reasonable.
4. Yes. The actuary has skills not usually found among auditors to identify and quantify self-insurance risks.

12. A quality audit concludes that a manufacturing organizations quality and continuous improvement plans are adequate and are being followed. This should mean that. Select one:

1. The organizations products will be substantially free from internal and external failure costs
2. The desired quality will be attained
3. Minimum compliance with quality laws and regulations will be attained
4. The organizations products will be worth more to consumers, though they will cost more to produce

13. Which of the following is a possible outcome of a successful control self-assessment (CSA)?

1. Increased ability of employees to modify steps in a process
2. Increased reporting of specific system failures
3. Increased accountability of management for accepting responsibility for risks
4. Increased ability to respond to risk more economically

14. In an objective-based workshop, team members focus on identifying. Select one:

1. Controls and key risks that have been selected by the facilitator
2. Risks to success and if the controls are adequate for mitigating them
3. Selected activities that are elements of a process
4. Controls that are currently being used to mitigate risks and any remaining risks to achieving objectives.

15. Based on the results of an enterprise-wide risk assessment and a preliminary survey for an engagement, internal audit determines that they lack the necessary expertise to complete the audit. The guiding factor in selecting and obtaining additional external services is:

1. The schedule
2. The budget
3. The constraints of existing internal audit knowledge
4. The needs of the organization.