QUESTION: 137 Topic 2, Volume B

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?

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.
Ionly
IIIonly
II and IIIonly
I,II,and III.

Answer(s): B

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QUESTION: 138 Topic 2, Volume B

What role, if any, should the internal audit activity have in the process of following up on observations and recommendations made by the external auditors?

The internal audit activity should have no role in this process in order to ensure independence.
The internal audit activity should become involved only if the chief audit executive has sufficient evidence that the follow-up is not occurring.
The internal audit activity should review the adequacy and effectiveness of management's follow-up actions.
The internal audit activity should become involved only if specifically requested by management or the board of directors.

Answer(s): C

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QUESTION: 139 Topic 2, Volume B

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?