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QUESTION: 111

The chief commodity trader for a large energy company learns from a friend that a competitor will likely fail its upcoming regulatory audit and will be forced to temporarily decrease production. If the information is true, the trader has short-term opportunities to make trades that will financially benefit the trader's company and will lead to a substantial increase in the trader's performance bonus. However, if the information is not true, making the trades will significantly increase the company's risk of being caught in a long position. From an ethical perspective, which of the following would be the most appropriate course of action for the trader to take?

Make the trade because the company and the trader will both benefit.
Have another trader on staff make the trade in order to avoid a conflict of interest.
Disclose the information to the risk oversight committee but proceed with the trade to capitalize on the opportunity.
Defer the decision to management and risk the loss of the trading opportunity.

Answer(s): D

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QUESTION: 112

An internal auditor pays to participate in the company's annual golf tournament, which is held outside of normal business hours. The auditor wins the putting contest and is awarded an all-expense-paid weekend vacation. According to the IIA Code of Ethics regarding objectivity, the auditor's best course of action would be to

Refuse the prize because the amount is significant.
Accept the prize because the event was held outside of normal business hours.
Refuse the prize because it represents an impairment to objectivity.
Accept the prize because the auditor received no special treatment.

Answer(s): D

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QUESTION: 113

Risk assessments are valuable to the internal audit activity's planning process because they assist in

Eliminating all areas with low risk from the audit plan.
Educating management on the importance of keeping the internal audit activity informed of organizational changes.
Identifying the audit universe or auditable activities that need to be reviewed.
Identifying risks that management and the internal auditors have overlooked.

Answer(s): C

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QUESTION: 114

Which of the following audit activities is within the scope of assurance activities as stated in the International Professional Practices Framework?

Review a make-or-buy decision and report a recommendation to management for approval.
Participate in negotiations for a corporate acquisition.
Assess financing alternatives for a new generator.
Perform an evaluation of management's planning process.

Answer(s): C

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