Which of the following would be the least desirable criteria against which to judge current
operations of a company's treasury function?

A.

The operations of the treasury function as documented during the last audit engagement.

B.

Company policies and procedures delegating authority and assigning responsibilities.

C.

Finance textbook illustrations of generally accepted good treasury function practices.

D.

Codification of best practices of the treasury function in relevant industries.

When internal auditors perform consulting services that add value and improve an
organization's operations,these services:

A.

Impair the internal auditors' objectivity with respect to an assurance service involving the
same engagement client.

B.

Would preclude the achievement of assurance from the consulting engagement.

C.

Should be consistent with the internal audit activity's empowerment reflected in the charter.

D.

Impose no responsibility to communicate information other than to the engagement client.

Which of the following best describes the underlying premise of the COSO enterprise risk
management framework?

A.

Management should set objectives before assessing risk.

B.

Every entity exists to provide value for its stakeholders.

C.

Policies are established to ensure that risk responses are performed effectively.

D.

Enterprise risk management can minimize the impact and likelihood of unanticipated events.

Overall audit efficiency is enhanced between the internal and external audit functions when:

A.

Internal audit coverage is reduced to avoid potential conflicts of interest.

B.

Audits of the same department are conducted at different times.

C.

The internal audit department reviews functions or departments prior to the external audit.

D.

External audit scope is reduced based on the internal audit department's activities.

In order to save time,an audit manager no longer required that a standard internal control
questionnaire be completed for each audit engagement. Does this represent a violation of
the Standards?

A.

Yes,because internal control should be evaluated on every engagement and the internal
control questionnaire is the mandated approach to evaluate controls.

B.

Yes,because internal control should be evaluated on every engagement and the internal
control questionnaire is the most efficient method to do so.

C.

No,because auditors may omit necessary procedures if there is a time constraint,based
on audit judgment.

D.

No,because auditors are not required to complete internal control questionnaires on
every engagement.

Which of the following risk assessment tools would best facilitate the matching of controls to risks?

A.

Control matrix.

B.

Internal control questionnaire.

C.

Control flowchart.

D.

Program evaluation and review technique (PERT) analysis.

At the beginning of fieldwork in an audit of investments,an internal auditor noted that the
interest rate had declined significantly since the engagement work program was created.
The auditor should:

A.

Proceed with the existing program since this was the original scope of work that was approved.

B.

Modify the audit program and proceed with the engagement.

C.

Consult with management to verify the interest rate change and proceed with the engagement.

D.

 Determine the effect of the interest rate change and whether the program should be modified.

In an assurance engagement of treasury operations,an internal auditor is required to
consider all of the following issues except:

A.

The audit committee has requested assurance on the treasury department's compliance
with a new policy on the use of financial instruments.

B.

Treasury management has not instituted any risk management policies.

C.

Due to the recent sale of a division,the amount of cash and marketable securities
managed by the treasury department has increased by 350 percent.

D.

The external auditors have indicated some difficulties in obtaining account confirmations.

The chief audit executive should periodically report the internal audit activity's
purpose,authority,responsibility,and performance,as well as significant risk exposures and
control issues,to which of the following?
I. Board of directors.
II.Senior management.
III.Shareholders.
IV.External auditors.

A.

IIonly

B.

I and IIonly

C.

I,II,and IIIonly

D.

I,III,and IVonly

A code of business conduct provides?

A.

A fraud avoidance plan that does not explicitly describe punishments for violations.

B.

A passive method of fraud deterrence.

C.

A program to anonymously report irregularities to authorities.

D.

An alternative to "tone at the top" programs.

Which of the following best describes how the increased use of computerization may
impact an auditor's assessment of the risk of fraud?

A.

Access to assets may be available to information systems personnel as well as to computer users.

B.

Computer controls are generally less effective than human review.

C.

Overrides of key controls may require less collaboration.

D.

Audit trails are less effective.

If earnings on financial statements for internal use only have been manipulated in the
past,an internal auditor is likely to focus on which of the following?

A.

The proper accrual of payables at the end of the interim period.

B.

The timing of revenue recognition and the valuation of inventories.

C.

Whether accounting estimates are reasonable given past actual results.

D.

Whether there have been changes in accounting principles that materially affect the financial statements.