TRIAL TEST CIA PART 2 SECTION 3

When assessing the risk associated with an activity, an internal auditor should

• Determine how the risk should best be managed.
• Provide assurance on the management of the risk.
• Update the risk management process based on risk exposures.
• Design controls to mitigate the identified risks.

Which of the following items is least likely to be considered when determining the strategy for assessing governance, risk management, and control?

• The maturity of the processes.
• The seniority of the persons responsible.
• The organizational culture.
• The members of the audit committee.

The chief audit executive for a large decentralized organization has developed a manual containing comprehensive detailed written procedures as a guide for the decentralized engagement work groups, each of which has 20 to 30 internal auditors. The organization recently acquired a small organization that has an internal audit activity consisting of a supervisor and two staff personnel. Which of the following actions is the most practical in providing administrative guidance for this new internal audit activity?

• Select key procedures from the manual and use informal supervisory direction for other engagement management issues.
• Use informal supervisory direction for engagement management issues.
• Use the already developed manual.
• Adopt the administrative procedures being followed by the internal auditors of the acquired organization.

Which of the following, though not appropriate for use with a large internal audit activity, is an acceptable approach for managing a small internal audit activity?

• Preparing comprehensive policies and procedures.
• Writing detailed instructions and guidelines for each engagement area.
• Using only daily, close supervision and written memoranda.
• Developing technical manuals to guide performance.

Which of the following actions is an appropriate response by organizations wishing to improve the public’s perception of their financial reporting?

• Increased adoption of audit committees composed of outside directors.
• Viewing internal auditing as a transient profession—a stepping stone to managerial positions.
• Requiring internal auditors to report all significant observations of illegal activity to the chief executive officer.
• Keeping external and internal auditing work separated to maintain independence.

Which of the following is not an appropriate member of an audit committee?

• The vice president of the local bank used by the organization.
• An academic specializing in business administration.
• A retired executive of a firm that had been associated with the organization.
• The organization’s vice president of operations.

Which of the following actions is an appropriate response by organizations wishing to improve the public’s perception of their financial reporting? 1. The chief audit executive, 2. Senior management, 3. The board of directors

• 1 and 2.
• 2 and 3.
• 1 only.
• 1 and 3.

Which of the following statements about the chief audit executive’s responsibilities for internal audit resources is most accurate?

• The CAE is responsible for ensuring that audit coverage is based on the skills of the internal audit activity.
• The CAE is responsible for presenting a detailed summary of audit resources to management.
• The CAE is responsible for the effective deployment of resources to achieve the approved audit plan.
• The CAE is responsible for administering the organization’s compensation program.

Which of the following is a false statement about the relationship between internal auditors and external auditors?

• Oversight of the work of external auditors is the responsibility of the chief audit executive.
• Sufficient meetings are scheduled between internal and external auditors to ensure timely and efficient completion of the work.
• Internal and external auditors may exchange engagement communications and management letters.
• Internal auditors may provide engagement work programs and working papers to external auditors.

To improve their efficiency, internal auditors may rely upon the work of external auditors if it i

• Performed after the internal auditing work.
• Primarily concerned with operational objectives and activities.
• Coordinated with internal auditing work.
• Conducted in accordance with the Code of Ethics.