QUESTION: 21

The organization's internal audit charter was last updated six years ago to update the charter, which of the following actions is most appropriate for the chief audit executive to take?

Wait for the next external assessment and address all of the missing information in the charter based on the recommendations from the external assessment team
Perform a review of HA guidance to become acquainted with the latest mandatory elements prior to updating the charter
Use an internal audit charter template from another organization that operates within the same industry.
Identify an individual within the internal audit activity who has in-depth knowledge of mandatory IIA guidance elements to address any gaps or areas of the current version of the charter that could be improved

Answer(s): B

Explanation:

The chief audit executive should review the latest guidance from the Institute of Internal Auditors (IIA) to ensure the internal audit charter complies with current standards. This approach ensures the charter reflects up-to-date practices and mandatory elements, maintaining the integrity and effectiveness of the internal audit function.

Reference:

"International Standards for the Professional Practice of Internal Auditing," which provides mandatory guidance on the internal audit charter.

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QUESTION: 22

What would be the effect if an organization paid one of its liabilities twice during the year, in error?

Assets, liabilities, and owners' equity would be understated.
Assets, net income, and owners' equity would be unaffected
Assets and liabilities would be understated.
Assets, net income, and owners' equity would be understated, but liabilities would be overstated

Answer(s): D

Explanation:

If an organization pays one of its liabilities twice, its assets (cash) would be reduced more than necessary. This results in an understatement of net income and owners' equity because the additional payment is an expense that should not have been recorded. Liabilities would be overstated because the duplicate payment does not reduce the liability correctly.

Reference:

"Financial Accounting Principles," which discusses the impact of errors on financial statements.

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QUESTION: 23

Which of the following best demonstrates that the internal audit activity is using due professional care?

The internal audit activity reports directly to the board on the engagements it performs.
Internal auditors undertake the necessary training to complete their audit work.
The completion of engagements is based on the assumption that fraudulent activities may exist.
Internal auditors consider the use of technology-based audit and other data analysis techniques

Answer(s): D

Explanation:

Demonstrating due professional care involves using appropriate technology and data analysis techniques to enhance the audit's effectiveness and efficiency. These tools help auditors identify anomalies, trends, and potential areas of risk more accurately and timely, reflecting a higher standard of care in their audit activities.

Reference:

"Auditing Standards and Guidelines," which emphasize the importance of using advanced techniques in audit processes.

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QUESTION: 24

A manager has allowed a subordinate employee to have greater control and responsibility over the tasks that he performs This is an example of which of the following?

Job enlargement
Job enrichment
Horizontal loading of the job.
Job rotation.

Answer(s): B

Explanation:

Job enrichment involves giving an employee more responsibility and control over their work, which increases the employee's sense of ownership and involvement in the task. This concept is about enhancing the role by adding more meaningful tasks and duties to it, rather than simply increasing the quantity of tasks (which would be job enlargement).

Reference:

This concept can be found in management and organizational behavior theories, such as Herzberg's Two-Factor Theory, which discusses how job enrichment can lead to higher job satisfaction.

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QUESTION: 22

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QUESTION: 24

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