QUESTION: 173 Topic 2, Volume B

The primary reason that a chief audit executive (CAE) reviews external audit management letters and management response is to:

Select areas to emphasize in future internal audit engagements.
Check the effectiveness of external audit resources used.
Ensure that comments in the letter are supported by evidence.
Verify that there has been no duplication of internal audit work.

Answer(s): A

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QUESTION: 174 Topic 2, Volume B

Which of the following statements is correct regarding corporate compensation systems and related bonuses?

A bonus system should be considered part of the control environment of an organization and should be considered in formulating a report on internal control.
II. Compensation systems are not part of an organization's control system and should not be reported as such.
III. An audit of an organization's compensation system should be performed independently of an audit of the control system over other functions that impact corporate bonuses.
Ionly
IIonly
IIIonly
II and IIIonly

Answer(s): A

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QUESTION: 175 Topic 2, Volume B

Which of the following elements should an auditor recommend for inclusion in an organization's code of ethics?

Ethics should vary with local customs in the organization's foreign operations.
II. Whistle-blowing should be discouraged because it can cause distrust among employees and false accusations which waste organizational resources on investigations.
III. Ethical behavior should not be incorporated into performance evaluations because it is too subjective and controversial.
Ionly
IIonly
I,II,and III.
None of the above.

Answer(s): D

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QUESTION: 176 Topic 2, Volume B

The chief commodity trader for a large energy company learns from a friend that a competitor will likely fail its upcoming regulatory audit and will be forced to temporarily decrease production. If the information is true, the trader has short-term opportunities to make trades that will financially benefit the trader's company and will lead to a substantial increase in the trader's performance bonus. However, if the information is not true, making the trades will significantly increase the company's risk of being caught in a long position. From an ethical perspective, which of the following would be the most appropriate course of action for the trader to take?

Make the trade because the company and the trader will both benefit.
Have another trader on staff make the trade in order to avoid a conflict of interest.
Disclose the information to the risk oversight committee but proceed with the trade to capitalize on the opportunity.
Defer the decision to management and risk the loss of the trading opportunity.

Answer(s): D

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Free IIA-CIA-Part1 Exam Braindumps (page: 44)

QUESTION: 173 Topic 2, Volume B

QUESTION: 174 Topic 2, Volume B

QUESTION: 175 Topic 2, Volume B

QUESTION: 176 Topic 2, Volume B