During an interview with a manager in a company's claims department, an auditor noted that the
manager became nervous and changed the subject whenever the auditor raised questions about
certain types of claims. The manager's answers were consistent with company policies and
procedures. When documenting the interview, the auditor should:

A.

Document the manager's answers, noting the nature of the nonverbal communication.

B.

Document the manager's answers but not the nonverbal communication because it is
subjective and is not corroborated.

C.

Conclude that the nonverbal communication is persuasive and that sufficient evidence exists to
begin a fraud investigation.

D.

Disregard the interview entirely because the verbal and nonverbal communications were
contradictory.

Which of the following is true of engagement recommendations?
I. Specific suggestions for implementation must be included.
II. The internal auditor's observations and conclusions may serve as the basis.
III. Actions to correct existing conditions or improve operations may be included.
IV. Approaches to correcting or enhancing performance may be suggested.

A.

I only

B.

III only

C.

I, III, and IV only

D.

II, III, and IV only

Which of the following performance criteria would be most useful when measuring the
performance of a customer service desk? 

A.

 The number of customer inquiries recorded per day.

B.

The percentage of customer issues resolved within 24 hours.

C.

The number of customer complaints recorded per day.

D.

The percentage of total customers served per day.

The efficiency of internal audit operations is best enhanced if workpaper standards:

A.

Permit the extent of documentation to vary according to engagement objectives.

B.

Require supervisors to initial and date each workpaper that they review.

C.

Allow access to workpapers by external parties if approved by senior management or the audit
committee.

D.

Mandate the workpaper retention period

According to the International Professional Practices Framework, which of the following
statements is correct regarding the communication of audit results?
I. Summary reports may be issued separately from or in conjunction with the final report.
II. Interim reports may be written or oral.
III. Detailed reports should always be issued to the audit committee.
IV. Interim reports should be used to communicate information which requires immediate attention.

A.

I and III only

B.

II and IV only

C.

I, II, and IV only

D.

I, II, III, and IV.

The chief audit executive (CAE) determined that based on management's oral response, the
action taken regarding an audit observation was sufficient when weighted against the relative
importance of the audit recommendation. Which of the following is the most appropriate step for
the internal auditor to take next?

A.

Initiate a follow-up audit to ensure that action has really been taken.

B.

Follow-up with management until a written response is obtained.

C.

Escalate the issue to the board and get their position on the issue.

D.

Note in the permanent file that follow-up needs to be performed as part of the next
engagement.

Which of the following will be an appropriate course of action when an auditor disagrees with a
client about a well-documented audit finding?

A.

Include both the audit finding and the client's position in the audit report.

B.

Defer reporting the item and plan to perform more detailed work during the next audit.

C.

Change the finding so that it is acceptable to the client.

D.

 Address the issue with senior management and the board for resolution prior to issuing the final
report.

A governmental auditor was assigned to determine reasons why the students in one region scored
significantly higher on education evaluation tests than did the students in another region. Previous
research showed that there is a direct correlation between public financial support and student
results. Which of the following is most likely to explain the difference in the regional results?

A.

The more successful region spends 30 percent more money on education than does the other region.

B.

A higher percentage of the general tax fund is spent on education in the more successful region
than in the other region.

C.

The more successful region spends more money per student on education than does the other
region.

D.

The more successful region has increased educational spending by an average of 10 percent
each year for the last three years, whereas the other region's increase averaged only three
percent.

Which of the following would constitute a violation of the IIA Code of Ethics?

A.

An internal auditor, who has recently joined the organization, has accepted an assignment to
audit the electronics manufacturing division. The auditor previously served as senior auditor for the
external audit of that division and has audited many electronics companies during the past two
years.

B.

An internal auditor has accepted an assignment to audit the warehousing function six months
from now. The auditor has no expertise in that area but has signed up for courses in warehousing
that will be completed before the assignment begins.

C.

An internal auditor has no ambitions for promotion and has not engaged in training or other
professional development activities during the last three years. The auditor's performance
assessments indicate consistent quality of work.

D.

An internal auditor discovered an internal financial fraud during the year, and the financial
statements were adjusted to properly reflect the loss associated with the fraud. The auditor
discussed the fraud with the external auditor during the external auditor's review of the working
papers detailing the incident.

An auditor decides to perform an inventory turnover analysis for both raw materials inventory and
finished goods inventory. The analysis would be potentially useful in:
I. Identifying products for which management has not been attuned to changes in market demand.
II. Identifying potential problems in purchasing activities. III. Identifying obsolete inventory.

A.

III only

B.

I and II only

C.

 II and III only

D.

I, II, and III