QUESTION: 13

Which of the following statements is true regarding engagement planning?

The scope of the engagement should be planned according to the internal audit activity's budget and then aligned to the risk universe.
The audit engagement objectives should be based on operational managements view of risk objectives
The planning phase of the engagement should be completed and approved before the fieldwork of the engagement begins.
The main purpose of the engagement work program is to determine the nature and timing of procedures required to gather audit evidence

Answer(s): C

Explanation:

Proper engagement planning is essential to ensure that the internal audit engagement is conducted effectively and efficiently.
Completing and approving the planning phase before starting the fieldwork ensures that all objectives, scope, resources, and methodologies are well-defined and agreed upon. This preparation helps in aligning the engagement with the overall audit strategy and reduces the risk of scope changes or misalignments during fieldwork

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QUESTION: 14

According to IIA guidance, which of the following statements regarding the internal audit charter is true?

The nature of consulting services typically is not included in the charter.
The chief audit executive must formally review the charter at least once a year
The nature of assurances provided to parties outside of the organization typically is not included in the charter.
The charter typically defines the internal audit activity's position within the organization.

Answer(s): D

Explanation:

The internal audit charter outlines the internal audit activity's purpose, authority, and responsibility within the organization.
It defines the internal audit activity's position within the organization, including reporting lines, independence, and access to records, personnel, and physical properties relevant to the performance of engagements.
This clarity helps ensure that the internal audit activity can operate independently and effectively

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QUESTION: 15

Which of the following would be the most effective fraud prevention control?

Email alert sent to management for checks issued over S100.000.
installation of a video surveillance system in a warehouse prone to inventory loss
New hire training to explain fraud and employee misconduct.
Daily report that Identifies unsuccessful system log-in attempts

Answer(s): C

Explanation:

Training new hires on fraud and employee misconduct is a proactive measure that raises awareness and educates employees about the organization's policies and the consequences of fraudulent behavior.
Such training helps create a culture of integrity and compliance, making employees less likely to engage in or tolerate fraud.
Continuous education and reinforcement of ethical behavior are essential components of an effective fraud prevention strategy

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QUESTION: 16

While conducting an engagement in the procurement department, the internal auditor noticed that the department head's travel reports showed minor travel expenses, and there were no charges for hotels, meals, or transportation However, the auditor knew that the department head frequently traveled worldwide to meet with suppliers and visit their production sites.
Which of the following would be the most appropriate next step for the auditor?

The auditor should make a note of the issue for follow-up when employee travel expenses are audited.
The auditor should analyze trends and changes among the organization's suppliers over the past few years.
The auditor should investigate whether there are any special arrangements regarding senior management travel.
The auditor should analyze the list of destinations the department head visited to estimate typical costs

Answer(s): C

Explanation:

Identifying the Anomaly: The internal auditor has identified a discrepancy in the travel expenses of the department head, who frequently travels yet reports minimal expenses. This raises a red flag that needs further investigation.
Understanding the Context: It is important to determine if there are legitimate reasons for the discrepancy, such as special arrangements made for senior management travel, which could explain the absence of typical travel expenses like hotels, meals, and transportation. Appropriate Next Step: Investigating whether there are any special arrangements for senior management travel (Option C) is the most logical next step. This helps in understanding the context and validating whether the discrepancy is justified or indicative of potential issues such as fraud or misreporting.

Reference:

Internal auditing standards emphasize the need for auditors to understand the environment and context of the organization's operations when anomalies are detected.
Other Options Considered:
Option A: Making a note for future follow-up is not proactive and delays addressing a potential issue. Option B: Analyzing supplier trends, while useful, does not directly address the travel expense anomaly.
Option D: Estimating costs based on destinations can provide insights but does not explain potential legitimate arrangements made by the organization.
Conclusion: Investigating special arrangements regarding senior management travel (Option C) is the most appropriate step to understand the discrepancy and ensure there are no irregularities.

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QUESTION: 13

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QUESTION: 14

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QUESTION: 15

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QUESTION: 16

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