After issuance of the engagement final communication for an audit of an organization's accounts
payable function, which of the following should be sent satisfaction surveys?
I. Manager of disbursements.
II. Controller.
III. Chief operating officer.
IV. Audit committee members.

A.

I only

B.

I and II only

C.

II and III only

D.

II, III, and IV only

In a client satisfaction survey for an internal audit engagement, client management should be
asked to assess which of the following factors?
I. Audit team's knowledge of the audited area.
II. Usefulness of the audit results.
III. Quality of management of the internal audit activity.
IV. Clarity of the scope and objectives of the audit engagement

A.

I and II only

B.

 II and IV only

C.

I, II, and IV only

D.

 I, III, and IV only

In response to an accounts receivable confirmation, a customer indicated that the invoice listed on
the confirmation letter had been paid two months earlier.
This may indicate that:

A.

The receivable was selected for confirmation in error.

B.

The customer is a bad credit risk.

C.

The receivable should be written off.

D.

 Fraudulent activity has occurred.

Which of the following conclusions would be appropriate for a beginning auditor performing an
audit of a payroll department?

A.

Employee taxes have been deducted at the correct rates, and the taxes have been forwarded
to the appropriate government agency.

B.

 Although there is insufficient segregation of duties, the impact is mitigated by compensating
controls.

C.

The payroll computer system should be replaced.

D.

The payroll department staff has the appropriate level of skills.

An audit of customer accounts receivable found that outstanding receivables as a percentage of
revenue had increased significantly during the past two years. The increase was attributed to the
extension of credit, at the urging of the marketing department, to a number of companies that were
not creditworthy. Which of the following would be least useful in monitoring the disposition of this
finding?

A.

Responses from the manager of accounts receivable regarding collection of outstanding
receivables.

B.

Periodic updates from the controller regarding the status of corrective actions.

C.

Information from the credit and marketing personnel assigned the responsibility for reevaluating
credit policies.

D.

Updates from the information technology division regarding implementation of a new accounts
receivable system.

During an audit of a major metropolitan museum, an auditor was unable to locate selected items
from the museum's collection. The director of the museum informed the auditor that the upcoming
replacement of the museum's inventory tracking system would address the auditor's concerns.
What follow-up activity should the auditor propose?

A.

Receive periodic feedback from museum staff regarding the status of the system
implementation.

B.

Monitor the system implementation and schedule a follow-up review once the new system is in
place.

C.

Determine whether the items are indeed missing and assess the ability of the new system to
remedy the problem.

D.

 Schedule an audit of the museum's security systems to determine if theft is a problem.

An audit of a Web-based third-party payment processor determined that a programming error
enabled customers to create multiple accounts for each mailing address. This caused problems during the processing of credit card transactions. Management agreed to correct the program and
notify customers with multiple accounts that the accounts would be consolidated. What should the
auditor do in response?
I. Amend the scope of the subsequent audit to verify that the program was corrected and that
accounts were consolidated.
II. Evaluate the adequacy and effectiveness of the corrective action proposed by management.
III. Schedule a follow-up review to verify that the program was corrected and the accounts were
consolidated.
IV. Do nothing because management has agreed to address the problem.

A.

III only

B.

IV only

C.

 I and II only

D.

 II and III only

A company's cellular phone costs vary significantly by sales representative and by month. Which
of the following would be the most appropriate approach for a consulting project concerning this
issue?

A.

Control self-assessment involving sales representatives.

B.

Benchmarking with other cellular phone users.

C.

 Business process review of cellular phone needs.

D.

Performance measurement and design of the budgeting process

Which of the following would be the most effective method to prevent installation of new
equipment that does not meet environmental permit requirements, or to prevent modification of
current processes in such a way that they no longer meet permit requirements?

A.

Require that the environmental compliance department perform regular inspections of the
manufacturing facility to identify new equipment or process modifications in progress.

B.

Rely on annual inspections by various regulatory agencies to identify equipment or processes
that require a permit.

C.

Require that the staff of the environmental compliance department attend monthly safety
meetings in different parts of the facility so that they can hear directly from the workers about any
changes.

D.

 Include the environmental compliance department in the review of proposed process changes
and equipment purchases affecting permit requirements.

Which of the following types of internal audit consulting engagements is an example of a
facilitation service?
I. Conducting control self-assessment workshops.
II. Participating on standing committees.
III. Reviewing regulatory compliance.
IV. Benchmarking.
V. Estimating savings from outsourcing processes.

A.

I and IV only

B.

I, III, and IV only

C.

II, III, and V only

D.

I, II, III, IV, and V.