Which of the following is an appropriate consideration by the auditor when preparing an
engagement program for a human resource audit?

A.

State the work steps in the form of questions.

B.

Use standard audit program for HR from previous years.

C.

Include in the audit program certain audit tests requested by audit client.

D.

Defer preparation of the audit program after the field work.

Senior management at a financial institution has received allegations of fraud at its
derivatives trading desk and has asked the internal audit activity to investigate and issue a
report concerning the allegations. The internal audit activity has not yet developed sufficient
proficiency regarding derivatives trading to conduct a thorough fraud investigation in this
area. Which of the following courses of action should the chief audit executive (CAE) take
to comply with the Standards?

A.

Engage the former head of the institution's derivatives trading desk to perform the
investigation and submit a report with supporting documentation to the CAE.

B.

Request that senior management allow a delay of the fraud investigation until the
internal audit activity's on-staff certified fraud examiner is able to obtain the appropriate
training regarding the analysis of derivatives trading.

C.

Request that senior management exclude the internal audit activity from the
investigation completely and instead contract with an external certified fraud examiner with
derivatives experience to perform all aspects of the investigation and subsequent reporting.

D.

Contract with an external certified fraud examiner with derivatives experience to perform
the investigation and subsequent reporting,with the chief audit executive approving the
scope of the investigation and evaluating the adequacy of the work performed.

Which of the following would be most effective in determining if the percentage of
medication orders containing errors improved after a hospital installed a computerized
medication-tracking system?

A.

Compare the proportion of erroneous medication orders before and after system
installation for similar periods.

B.

Compare the number of errors before and after system installation for similar periods.

C.

Compare,after adjusting for the number of patients,the proportion of erroneous
medication orders before and after system installation.

D.

Compare,after adjusting for the number of patients,the number of errors before and after
system installation for similar periods.

The top three sales representatives for a company consistently include non-allowable
charges on their expense reports. Line management is reluctant to deny reimbursement of
the charges for fear of losing the sales representatives. This situation has the greatest
negative impact on which of the following internal control components?

A.

Monitoring.

B.

Control environment.

C.

Information and communication.

D.

Control activities.

Which of the following actions would be considered a violation of the Standards?
I.Drafts of engagement communications were reviewed with the audit client to obtain input.
The client's comments were considered when developing the engagement final communication.
II.An auditor participated as part of a development team to review the control procedures to
be incorporated into a major computer application under development.
III.Given limited resources,the chief audit executive performed a risk analysis to determine
which functions to audit.

A.

IIonly

B.

I and IIIonly

C.

I,II,and III.

D.

None of the above.

Which of the following would be the most useful in developing an annual audit plan?

A.

General purpose audit software.

B.

Voting software and hardware.

C.

Flowcharting and data capture software.

D.

Risk assessment software.

An internal auditor is reviewing a new automated human resources system. The system
contains a table of pay rates which are matched to the employee job classifications. The
best control to ensure that the table is updated correctly for only valid pay changes would be to:

A.

Limit access to the data table to management and line supervisors who have the
authority to determine pay rates.

B.

Require a supervisor in the department,who does not have the ability to change the
table,to compare the changes to a signed management authorization.

C.

Ensure that adequate edit and reasonableness checks are built into the automated system.

D.

Require that all pay changes be signed by the employee to verify that the change goes
to a bona fide employee.

If an engagement client's operating standards are vague and thus subject to interpretation,the auditorshould:

A.

Seek agreement with the client as to the standards to be used to measure operating performance.

B.

Determine best practices in the area and use them as the standard.

C.

Interpret the standards in their strictest sense because standards are otherwise only
minimum measures of acceptance.

D.

Omit any comments on standards and the client's performance in relationship to those
standards,because such an analysis would be meaningless.

Which of the following is a benefit from reduced testing during a particular phase of an
audit engagement?

A.

The size of the internal audit activity can be reduced.

B.

There is less concern about assessing inherent risk.

C.

The level of planned audit risk is lowered.

D.

Additional audit hours are available for pursuing other engagement objectives.

To assure that the technical proficiency of internal auditors is appropriate for the audit
engagements to be performed,a chief audit executiveshould:

A.

Consider the scope of work and level of responsibility when establishing criteria for
education and experience in filling internal auditing positions.

B.

Ensure that each newly hired auditor is qualified in all of the disciplines needed to accomplish the department's audit mission.

C.

Oversee a training program that matches the actual training provided with the interests of individual auditors.

D.

Require all of the audit staff to pursue a minimum number of continuing professional education hours each year.