QUESTION: 289

During an audit of the accounts receivable (AR) process, an internal auditor noted that reconciliations are still not performed regularly by the AR staff, a recommendation that was made following a previous audit. Monitoring by the financial reporting function has failed to detect the shortcoming. Both the financial reporting function and AR report to the controller, who is responsible for implementing action plans.
Which of the following supports the internal auditor's decision to combine both observations into one reported finding?

The observation was made during the same audit, and the action plan has a common owner.
The observation relates to the same control activity within a common process.
The observation has a common control, and it was noted in a prior audit.
The observation has a common process, and the action plan for the observation has a common owner.

Answer(s): D

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QUESTION: 290

A chief audit executive (CAE) received a detailed internal report of senior management's internal control assessment.
Which of the following subsequent actions by the CAE would provide the greatest assurance over management's assertions?

Assert whether the described and reported control processes and systems exist.
Assess whether senior management adequately supports and promotes the internal control culture described in the report.
Evaluate the completeness of the report and management's responses to identified deficiencies.
Determine whether management's operating style and the philosophy described in the report reflect the effective functioning of internal controls.

Answer(s): C

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QUESTION: 291

Which of the followings statements describes a best practice regarding assurance engagement communication activities?

All assurance engagement observations should be communicated to the audit committee.
All assurance engagement observations should be included in the main section of the engagement communication.
During the "communicate" phase of an assurance engagement, it is best to define the methods and timing of engagement communications.
A detailed escalation process should be developed during the planning stage of an assurance engagement.

Answer(s): D

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QUESTION: 292

Which of the following statements is correct regarding risk analysis?

The extent to which management judgments are required in an area could serve as a risk factor in assisting the auditor in making a comparative risk analysis.
The highest risk assessment should always be assigned to the area with the largest potential loss.
The highest risk assessment should always be assigned to the area with the highest probability of occurrence.
Risk analysis must be reduced to quantitative terms in order to provide meaningful comparisons across an organization.

Answer(s): A

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QUESTION: 289

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QUESTION: 292