Get IAA-IAP Products Practice Material for IAA-IAP Exam Question Preparation [Q58-Q78]

NO.58 During an accounts payable audit engagement, the internal auditor identified a risk that vendor invoices may be paid multiple times. Which of the following would be appropriate preventive controls to mitigate this risk?

System controls to identify identical invoice amounts from the same vendor that prohibit payment after the initial invoice.

System controls to identify identical invoice numbers and dates from the same vendor prior to payment.

Manual controls requiring the reconciliation of paid vendor invoices to monthly invoice statements provided by the vendor.

NO.59 Which of the following is an element of a well-formed audit recommendation?

Factual evidence identified during the engagement.

Measures to prevent recurrence of the condition.

Factors that allowed the condition to exist.

NO.60 A newly hired internal auditor has been asked to examine the sales of a specific product over the last four years. Which of the following analytical review techniques should the auditor employ?

Ratio analysis.

Trend analysis.

External benchmarking.

NO.61 Which of the following is considered an organization-level control, as opposed to process-level or transaction- level?

Personnel policies requiring the employment of competent personnel, based on training and experience, to manage complex functions such as accounting and financial reporting.

Supervision of finance employees, including day-to-day oversight and periodic performance evaluations.

Segregated budgeting responsibilities of finance employees, including review and approval of financial reports.

NO.62 Which of the following elements are typically included in an engagement work program?

Planning, objectives, and preliminary risk assessments

Fieldwork, analytical testing, and resources

Opinions and final engagement communications

NO.63 According to the IIA’s Code of Ethics, which of the following best describes the conduct of an internal auditor who demonstrates the principle of competency?

The auditor continually improves her proficiency and the effectiveness and quality of her services

The auditor is prudent in the use and protection of information acquired in the course of her work

The auditor does not accept anything that may impair or be presumed to impair her professional judgment

NO.64 Which of the following conditions would threaten an internal auditor’s objectivity?

Providing assurance services over the activity where the internal auditor was employed 10 months prior.

Using knowledge that the internal auditor gained in his previous position to update systems and controls descriptions.

Providing consulting services over the activity where the internal auditor was employed two years prior.

NO.65 According to IIA guidance, which of the following are commonly standardized workpaper elements?

Workpapers should include a uniform cross-referencing system

Workpapers should be completed in an electronic format only

Workpapers should be supported by inclusion of original documentation

NO.66 During an accounts payable audit engagement, the internal auditor found that vendor invoices are always paid
30 days after the invoice date, regardless of the vendor’s payment terms. The auditor also discovered that accounts payable employees are not comparing vendor invoices received to previous vendor invoices prior to payment. Based on the auditor’s observations, what are the potential risks?

Poor cash management due to potentially lost payment discounts

Poor cash management due to potentially paying fraudulent invoices

Poor cash management due to potentially paying the wrong vendors

NO.67 According to The IIA’s Code of Ethics, which of the following best illustrates the principle of confidentiality?

The auditor refused to use information learned during an audit to diversify his financial portfolio.

The auditor declined to delegate critical audit lead responsibilities to a new auditor.

The auditor declined to lead an audit of a department in which his nephew is the manager.

NO.68 Internal and external benchmarking by the internal audit activity are examples of which of the following?

Inquiry

Confirmation

Analytical procedures

NO.69 Which of the following statements best describes quality audit workpapers?

They should be relevant and interesting.

They should be electronic and indexed.

They should be understandable and complete.

NO.70 During a review of the payroll department, a payroll associate informs the internal auditor, in confidence, that a co-worker is under a great deal of personal stress and has made several uncharacteristic mistakes over the past few weeks. The payroll associate asks the auditor to be sympathetic to the co-worker when drafting the audit findings. If the auditor adjusts the audit findings in consideration of this request, which of the following IIA Code of Ethics principles would be violated?

Integrity and Objectivity.

Objectivity and Confidentiality.

Integrity and Confidentiality.

NO.71 Which of the following scenarios would be the strongest indicator of fraud in an accounts payable process?

The accounts payable manager was unable to provide documentation relating to travel expenses on one of the samples selected.

The invoices submitted by one of the organization’s vendors are more than six months old.

The address on one of the vendor invoices matches an employee’s residential address.

NO.72 Which of the following statements is appropriate to include in a high-quality internal audit engagement communication?

The internal audit team conducted a review of the financial reporting process prior to year-end. The overall findings have been provided for management’s consideration prior to the completion of the organization’s annual external financial audit.

The internal audit team noted numerous weaknesses in the organization’s internal controls over financial reporting. The team recommends that management determine the root cause of the weaknesses.

The internal audit team conducted an engagement under the assumption that significant control weaknesses were likely. The purpose of the review was to uncover those weaknesses.

NO.73 During engagement planning, which of the following sources would provide the internal auditor with relevant information to obtain an understanding of the process under review?

Final report from an external financial audit of the process under review, which includes the status of management’s corrective action plans

Mission, strategic objectives, and key performance indicators of the process under review, based on documented plans, policies, procedures, and discussions with management

The internal audit activity’s annual audit plan and discussions that led to its development

NO.74 When is it appropriate for the internal auditor to determine the engagement’s scope and objectives?

During the planning of the engagement

During the performance of the engagement

In the final engagement report

NO.75 The chief audit executive scheduled an exit meeting to discuss conclusions and recommendations with management before issuing the final engagement communication. Which of the following describes the primary reason that the exit meeting should be documented?

The Standards require that the internal auditor document exit meetings

The information may be needed if a disagreement about the content arises

The results of the discussion form part of the internal auditor’s performance review

NO.76 Which of the following would be considered out of scope for a purchasing process audit engagement?

Authorization of requisitions

Control of goods

Matching goods received to requisitions

NO.77 Which of the following situations is most likely to require a compliance engagement from the internal audit activity?

An organization must restate its financial statements due to an error in fixed asset valuation.

An organization is preparing to launch an enhanced service for its online customer information system.

An organization is subject to newly imposed industry health and safety regulations.

NO.78 Which of the following statements is true with regard to the adequacy of a control design?

Regardless of the adequacy of control design, it is important to evaluate the operating effectiveness of all key controls to justify the integrity of the internal audit process.

Even if a control is effective, it may not achieve the control objective due to an inadequate design.

Control designs are considered adequate as long as secondary controls will effectively mitigatethe risk.

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