QUESTION: 25

A company has entered into a $20, 000, 000 fixed-price contract with a general contractor for the construction of a new retail outlet. For this contract, which of the following would represent the greatest risk?

Excessive labor charged to the project
Poor physical protection of materials and equipment
Failure to complete the project within budget
Substitution of inferior materials

Answer(s): D

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QUESTION: 26

The chief audit executive for an organization has just completed a risk assessment process, identified the areas with the highest risk, and assigned an audit priority to each. Which of the following statements is true and consistent with the International Professional Practices Framework?

I). Items should be ranked in the order of quantifiable dollar exposure to the organization.
II). The audit priorities should be in order of major control deficiencies.
III). The risk assessment, though quantified, is the result of professional judgments about both exposures and probability of occurrences.

I only
III only
II and III only
I, II, and III

Answer(s): B

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QUESTION: 27

All of the following would normally be involved in preparing for and carrying out the internal audit activity's annual plan except

Establishing policies and procedures for workpapers and referencing
Providing periodic activity reports to the audit committee on audit engagements in progress
Assessing the amount of risk in major departments
Training audit staff on appropriate audit methodologies for addressing any newly identified risks.

Answer(s): A

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