QUESTION: 129

Which of the following management actions would be most effective in order to strengthen ethical awareness within an organization?

Require employees to certify that they have read and understand the organization's code of conduct.
Ensure that all employees pass a criminal background check prior to being hired.
Mandate that employees follow documented departmental procedures and processes.
Request that the internal audit activity test departments with a higher risk of employee fraud.

Answer(s): A

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An internal auditor has been asked to review the treasury department's compliance with corporate policy related to the use of forward trading to manage currency valuation risk. The auditor finds no related policies in the corporate policy manual but does discover that the department is following a policy developed by the company's bank. The most appropriate response from the auditor would be to

Withdraw from the audit engagement because there is nothing to audit due to the lack of a corporate policy.
Perform no further audit work and report the lack of a corporate policy as an audit observation.
Postpone the audit engagement until a corporate policy can be established.
Use the bank's policy as the audit criteria and determine whether formal adoption should be recommended in the engagement final communication.

Answer(s): D

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QUESTION: 131

During an audit engagement, an internal auditor finds that management is not complying with previous commitments made to the external auditors. However, the auditor determines management's actions to be justified due to significant changes in the business. The best course of action for the auditor to take would be to

Proceed with the audit engagement and assess the changes actually implemented by management.
Inform the external auditors and seek their guidance.
Inform the external auditors and remove the associated work from the internal audit scope.
Compare the recommended changes against the changes made by management and advise management which action to take.

Answer(s): A

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